XRP ETF: SEC Begins Formal Review of WisdomTree Proposal

The ongoing regulatory discourse around digital assets in the U.S. has taken a significant step forward as the U.S. Securities and Exchange Commission (SEC) officially begins a formal review of a proposed spot XRP ETF. This development marks a potential milestone for the broader XRP community and for Ripple, as the SEC evaluates whether to allow such a financial product into mainstream markets.

In a recent filing, the SEC confirmed the initiation of proceedings to review whether it will approve WisdomTree’s spot XRP ETF. This ETF, if greenlit, would be listed and traded on the Cboe BZX Exchange. WisdomTree, a well-established asset management firm, is no stranger to the ETF space—it was one of several issuers behind the recently approved spot Bitcoin ETFs in the United States.

SEC Evaluates Compliance and Investor Protection

As part of its review, the SEC is examining whether the proposed listing conforms to regulations designed to safeguard market integrity and investor interests. A major point of consideration involves determining if sufficient measures are incorporated to deter fraudulent activity and manipulation within the ETF framework. Such scrutiny is standard, especially for financial vehicles tied to cryptocurrencies, which historically have been susceptible to market volatility and price manipulation.

In its call for public input, the SEC has requested that interested individuals and industry stakeholders submit their views on the potential risks and benefits of the WisdomTree XRP ETF. Commenters are encouraged to evaluate the Cboe BZX Exchange’s justifications for the rule change and to voice any additional comments concerning the structure and compliance of the proposal.

Importantly, the initiation of this process does not mean a spot XRP ETF will inevitably be approved. The SEC has a maximum of 240 days to issue a verdict on whether the ETF can proceed. This extended evaluation period reflects the complexity of approving a spot-based digital asset ETF, especially one related to XRP, given its historical ties to legal and regulatory scrutiny.

Rising Interest in XRP Investment Products

While WisdomTree’s application is historic as the first formal spot XRP ETF under SEC consideration, it follows other recent XRP fund launches. In an earlier move, asset manager Teucrium debuted a leveraged XRP ETF on NYSE Arca. This fund allows investors to gain amplified exposure to XRP’s performance using leverage. Subsequently, ProShares introduced three XRP futures ETFs, providing both leveraged and inverse investment strategies within the crypto derivatives market.

These developments indicate growing investor appetite for structured XRP financial products. The existence of these futures and leveraged ETFs could set a favorable precedent for a spot ETF approval. However, the SEC remains cautious, particularly given Ripple’s past regulatory entanglements.

Ripple, the company closely affiliated with XRP, had been locked in a protracted legal battle with the SEC over whether XRP should be classified as a security. Ripple eventually won a major legal victory, which appears to have opened the door for fresh conversations around the regulatory status of XRP and associated financial products like ETFs. That legal clarity may factor into the SEC’s willingness to consider WisdomTree’s application.

Should the spot XRP ETF receive approval, it would mark a landmark achievement for both Ripple and XRP token holders. It would also signal a maturing landscape for the cryptocurrency investment sector, integrating XRP more closely into traditional financial frameworks.

Related: Expert Advice: Sell XRP If You’re Confused

As the regulatory process unfolds, all eyes remain on the SEC’s response. An approval could catalyze broader acceptance of XRP-backed financial instruments and prompt other asset managers to file similar applications.