Cryptocurrency asset management firm Bitwise has taken a bold step toward expanding access to digital assets by filing a registration statement with the U.S. Securities and Exchange Commission (SEC) to launch the first spot XRP exchange-traded fund (ETF). This move marks a pivotal development in the ongoing evolution of crypto-based financial products and could significantly influence how institutional and retail investors gain exposure to XRP, the native token of Ripple Labs.
The proposed ETF would allow investors to directly hold XRP through a regulated investment vehicle, offering greater transparency, security, and ease of access compared to traditional crypto exchanges. The filing, submitted in the form of an S-1 registration statement, outlines the fund’s structure, custodial arrangements, and key operational details.
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Bitwise's Case for XRP as a Non-Security
In its filing, Bitwise made a clear and strategic assertion: XRP is not a security. This stance directly challenges the SEC’s long-standing position that certain cryptocurrency tokens—especially those involved in initial fundraising efforts—qualify as securities under U.S. law. The SEC previously sued Ripple Labs in 2020, alleging that its sale of XRP constituted an unregistered securities offering.
However, a landmark July 2023 ruling by Judge Analisa Torres determined that secondary market sales of XRP on public exchanges do not meet the definition of securities transactions, a critical distinction that has since fueled momentum in the crypto industry for broader regulatory clarity.
Bitwise leveraged this legal precedent in its application, emphasizing that XRP operates on a decentralized ledger and functions more like a currency or commodity than an investment contract. The firm also highlighted XRP’s utility in cross-border payments and liquidity provision, reinforcing its argument that the token serves a functional role in global finance rather than merely acting as an investment vehicle.
Custody and Administration: Building Trust Through Structure
To ensure regulatory compliance and investor confidence, Bitwise outlined a robust operational framework for the proposed XRP ETF:
- BNY Mellon will serve as the trust administrator and transfer agent, responsible for maintaining shareholder records and facilitating ownership transfers.
- Coinbase Custody will act as the digital asset custodian, providing secure storage solutions for the underlying XRP holdings.
These partnerships with established financial institutions underscore Bitwise’s commitment to aligning the ETF with traditional asset management standards. By integrating trusted names in banking and crypto custody, the firm aims to bridge the gap between legacy finance and digital asset innovation.
Regulatory Uncertainty Looms Over Approval Chances
Despite Bitwise’s thorough filing, the future of the XRP ETF remains closely tied to ongoing legal developments. The SEC has until October 7, 2025, to appeal the 2023 court ruling that favored Ripple. If the agency chooses to appeal—and particularly if it succeeds—the classification of XRP could shift back into the securities category.
Such an outcome would pose a significant threat to the ETF’s approval prospects. In fact, Alex Thorn, head of research at Galaxy Digital, noted that an SEC appeal would effectively reduce the chances of approval to near zero. Bitwise acknowledged this risk in its filing, stating that if XRP were reclassified as a security, it could trigger mandatory liquidation of the trust under specific regulatory conditions.
This uncertainty highlights the fragile state of crypto regulation in the U.S., where innovation often outpaces policy. While spot bitcoin and ether ETFs have already gained approval, XRP occupies a more contested legal space due to its association with Ripple’s unresolved litigation.
Why This ETF Matters for the Crypto Ecosystem
The introduction of a spot XRP ETF would represent more than just another investment product—it could signal broader acceptance of digital assets that exist in regulatory gray areas. For investors, it offers:
- Regulated exposure to XRP without managing private keys or using crypto exchanges.
- Transparency through regular reporting and third-party audits.
- Liquidity via traditional brokerage platforms.
Moreover, approval could set a precedent for other tokenized assets currently navigating complex legal landscapes. It may also pressure regulators to provide clearer guidelines on how decentralized tokens are classified under U.S. securities law.
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FAQ: Understanding the Bitwise XRP ETF Filing
Q: What is a spot XRP ETF?
A: A spot ETF holds actual XRP tokens as underlying assets, allowing investors to gain direct price exposure without buying crypto themselves. This differs from futures-based ETFs, which track derivatives contracts.
Q: Why hasn’t there been an XRP ETF before now?
A: Regulatory concerns over whether XRP is a security have delayed any formal proposals. The 2023 court ruling created a window of opportunity, but final classification remains pending.
Q: How does this affect Ripple’s legal battle with the SEC?
A: While not directly impacting the lawsuit, Bitwise’s filing strengthens the narrative that XRP functions as a non-security in public markets, adding pressure on regulators to clarify their stance.
Q: Can I invest in this ETF today?
A: Not yet. The filing is just the first step. The SEC must review and approve the application, which could take months—or longer if legal challenges arise.
Q: What happens if the SEC appeals the 2023 ruling?
A: An appeal could stall or kill the ETF proposal. If XRP is reclassified as a security, the fund may be forced to liquidate or restructure entirely.
Q: How does this compare to bitcoin and ether ETFs?
A: Similar in structure, but higher regulatory risk. Bitcoin and ether were deemed commodities by regulators; XRP’s status is still contested.
A Strategic Move Amid Shifting Tides
Bitwise’s decision to file for an XRP ETF reflects growing confidence in the maturation of digital asset markets—even amid uncertainty. With prior successes in launching spot bitcoin and ether ETFs in the U.S., the firm is positioning itself at the forefront of crypto innovation.
The timing of this filing is no coincidence. With increasing demand for diversified crypto exposure and evolving judicial interpretations of digital assets, Bitwise is testing the boundaries of what’s possible under current regulations.
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As regulators weigh their next steps and courts determine the fate of XRP’s classification, one thing is clear: the line between traditional finance and decentralized technology continues to blur. Whether this ETF gains approval or not, it serves as a powerful indicator of where the future of investing may be headed.
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