Bitwise has made a significant move by becoming the first company to file for a spot XRP exchange-traded fund (ETF) in the U.S. This filing could hinge on whether Donald Trump wins the upcoming presidential election. Ripple’s CEO has previously stated that an XRP ETF is "inevitable."
The crypto community reacted positively to Bitwise Asset Management’s filing. Bloomberg Intelligence analyst Eric Balchunas even compared the situation to a “Trump Call.” In the world of derivatives, call options are bets on an asset hitting a certain price. If it does, the payout can be substantial.
Balchunas pointed out that companies filing for crypto ETFs, whether for XRP or Solana, are essentially betting on Trump’s victory. If Trump wins, he could remove Gary Gensler, the current head of the Securities and Exchange Commission (SEC), who is viewed as anti-crypto. Trump has said he would fire Gensler if elected. Balchunas expressed skepticism about any new crypto ETFs being approved if Vice President Kamala Harris wins.
XRP is a digital asset developed by Ripple Labs, designed to speed up cross-border transactions. It’s often seen as a competitor to the Swift payment system. Bitwise is the only asset manager to have filed for an XRP ETF, but it's not the first to seek approval for a crypto ETF beyond Bitcoin and Ethereum. In June, VanEck filed with the SEC for a spot Solana ETF, but the SEC rejected that application in August. Still, VanEck’s head of digital assets research, Matthew Sigel, stated that the application “remains in play.”
Since 2020, Ripple has been in a legal battle with the SEC, which claims the company raised $1.3 billion by selling XRP as an unregistered security. A ruling in 2023 found that XRP is not a security when traded on public exchanges. However, institutional sales were deemed to violate securities laws, making them investment contracts under U.S. law.
In the U.S., securities must be registered to ensure investors receive full disclosure and legal protections. Ripple allegedly bypassed this requirement. The case concluded in August, with Ripple ordered to pay a $125 million fine. While the judge ruled that secondary sales of XRP on exchanges are not securities offerings, this may not affect Bitwise’s ETF application.
Katalin Tischhauser, head of investment research at crypto bank Sygnum, emphasized that the issue isn’t whether the SEC views XRP as a security. It’s about the SEC needing to change its stance on what constitutes an acceptable surveillable market. The SEC has argued that no spot crypto ETFs can be listed on U.S. exchanges until there is a regulated futures market for the asset. Tischhauser noted that such a market currently exists only for Bitcoin and Ethereum, the only cryptocurrencies with regulated futures markets on the Chicago Mercantile Exchange.
Tischhauser suggested that Bitwise’s XRP ETF application might be a way to “start the clock ticking,” hoping for a change in the SEC’s position after the election.
Bitwise’s filing comes after Ripple Labs CEO Brad Garlinghouse stated that the approval of Ethereum ETFs earlier this year indicated that ETFs for XRP and other digital assets were “inevitable.” He noted, “People don’t just want exposure to one commodity.”
However, it’s unclear if there’s enough demand for an XRP ETF. Spot Bitcoin ETFs launched in January attracted around $18 billion in new capital, exceeding expectations. On the other hand, recently launched Ethereum ETFs have faced $572 million in outflows since their July debut. Grayscale’s XRP Trust currently has only $1.5 million in assets, compared to over $73 million in its Solana Trust. Since the SEC initiated its lawsuit against Ripple Labs, XRP has dropped from being the second-largest crypto asset to the seventh-largest.