Home Altcoins News Bitwise’s XRP ETF Application Faces Significant Challenges Amid SEC Scrutiny

Bitwise’s XRP ETF Application Faces Significant Challenges Amid SEC Scrutiny

XRP ETF

Bitwise Asset Management’s recent application for an XRP exchange-traded fund (ETF) has hit several roadblocks, raising questions about the viability of this financial product amid ongoing scrutiny from the U.S. Securities and Exchange Commission (SEC). Following the application’s submission in early October, XRP’s price has faced a notable downturn, closing at $0.66 at the end of September and dropping nearly 20% to around $0.53.

SEC’s Legal Challenge Against Ripple

One of the primary factors contributing to XRP’s declining value is the ongoing legal battle between the SEC and Ripple Labs. The SEC’s forthcoming objections to Ripple could significantly impact the likelihood of XRP receiving ETF approval, leading to further uncertainty in the market. The outcome of this case is crucial, as it sets a precedent for how regulatory bodies view cryptocurrencies and their associated financial products.

Kaiko’s Analysis: Concerns Over Market Manipulation

In a recent report, analysts at Kaiko emphasized that the SEC’s legal stance complicates the path to ETF approval for XRP. The firm noted that the SEC’s primary concern is market manipulation, which diminishes the chances for entities like Grayscale to transition from private placements to a public XRP ETF. Grayscale has introduced an XRP trust with hopes of eventually converting it into an ETF, but Kaiko’s analysis casts doubt on the feasibility of this goal under current market conditions.

The Futures Market Debate

A contentious point in the discussion around XRP’s ETF application is the absence of a futures market. Analysts are divided on whether this lack of a futures market hampers XRP’s chances for ETF approval. Some believe that the absence of futures is a significant limitation, while others argue that it should not be a deal-breaker. Notably, Hester Peirce, a crypto-friendly SEC commissioner, has stated that a spot ETF could still be possible even without an active futures market.

Peirce’s comments suggest that while a futures market could enhance the legitimacy of an ETF, it is not strictly necessary. She highlighted that, despite this absence, approval for an XRP spot ETF could follow similar paths taken by Bitcoin and Ethereum, both of which have faced their regulatory challenges.

Future Prospects for Bitwise and Grayscale

As Bitwise and Grayscale navigate these complexities, the SEC is expected to evaluate each application based on its specific circumstances. The recent approval of a Bitcoin spot ETF occurred after the establishment of existing futures funds, but the differing dynamics of the XRP market may complicate its application.

The ongoing regulation of the ETF market and the SEC’s evolving stance are crucial factors influencing the future of cryptocurrency financial products like XRP. The uncertainty surrounding these developments continues to weigh heavily on the market, affecting both current stakeholders and potential investors.

Conclusion: A Cloudy Horizon for XRP ETFs

As it stands, the path to ETF approval for XRP remains fraught with challenges, primarily stemming from SEC scrutiny and ongoing legal battles. The prospects for Bitwise and Grayscale hinge on navigating these complexities while addressing the concerns raised by regulators. The future of XRP, as well as its potential as an ETF, will depend heavily on the outcomes of these regulatory processes and the broader market environment. As the situation develops, market participants will be watching closely to see how it unfolds.

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dan saada

Dan hold a master of finance from the ISEG (France) , Dan is also a Fan of cryptocurrencies and mining. Send a tip to: 0x4C6D67705aF449f0C0102D4C7C693ad4A64926e9

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