The SEC has officially filed a Notice of Appeal in its legal battle against Ripple Labs and its executives, Bradley Garlinghouse and Christian Larsen.
This move effectively halts progress on the recently proposed XRP ETF by Bitwise, casting doubt on its future.
Bitwise filed for the first-ever spot XRP ETF on September 30, 2024, just days before the SEC’s deadline to appeal the court ruling in favor of Ripple. However, with the SEC now challenging the final judgment from August 7, 2024, the legal battle over whether XRP is considered a security is far from over.
The SEC’s appeal could extend Ripple’s legal saga well into 2025, creating a cloud of regulatory uncertainty over XRP and any financial products associated with it.
The final judgment in the Ripple case had ruled in favor of Ripple Labs, allowing XRP to be traded without being classified as a security. This was seen as a significant victory for Ripple and the wider crypto industry. However, the SEC’s decision to appeal the ruling has put that victory on hold, with XRP’s status once again in question.
Alex Thorn, Head of Research at Galaxy Digital, had previously warned that an SEC appeal would significantly reduce the likelihood of a successful XRP ETF, stating that the chances would drop to “near zero” if the appeal were filed.
Bitwise’s spot XRP ETF was expected to offer institutional and retail investors exposure to XRP through a regulated financial product. Now, with the SEC’s appeal, the ETF’s approval process is likely delayed indefinitely.
The ongoing legal battle will likely keep XRP’s regulatory status—and, by extension, its market performance—uncertain for the foreseeable future, as the court case heads to the U.S. Court of Appeals for the Second Circuit.
The Ripple case has become one of the most significant legal battles in the crypto world, and the SEC’s appeal only adds more complexity. For now, investors and the crypto industry will have to wait for the courts to decide XRP’s future, as both sides prepare for what could be an extended legal battle.
The legal uncertainty surrounding XRP makes it unlikely that the Bitwise XRP ETF or similar financial products will move forward until there is a final resolution.