Galaxy Digital Head of Research

Share this article

Bitwise’s XRP ETF offering is unlikely to succeed if the SEC appeals Ripple’s ruling that determined secondary market sales of XRP to retail investors were not securities, according to Alex Thorn, head of research at Galaxy Digital.

The deadline for the SEC to appeal of the decision in its case against Ripple is set for October 7, 2024. Although the agency has not yet decided whether to appeal, Bitwise has continued with its plan for an XRP ETF.

The firm officially filed for a trust entity on September 30, a move that could serve as the basis for a potential XRP ETF. file follows the launch of Grayscale’s latest XRP Trust program month.

“The (SEC) has until next week (Oct. 7) to appeal Judge Torres’ July 2023 decision (which held that secondary sales of XRP through exchanges were not securities),” Thorn said. “The likelihood of this ETF submission succeeding drops to almost zero if I appeal.”

According to FOX Business journalist Eleanor Terrett, a former SEC attorney said the SEC will “probably” appeal the court’s decision because “everybody there (at the SEC) really believes that the decision is wrong, that it’s not good law, and it should to be appealed.”

The SEC expressed displeasure with the ruling, labeling it “wrongly decided” in a filing as part of its case against Terraform Labs. The agency says the court’s decision creates an unfair distinction between institutional investors and retail investors.

If the SEC goes ahead with an appeal, it is expected to extend the litigation until 2025. However, if the SEC does not challenge the court’s decision, Ripple could have completed its legal battle after paying penalties.

Commenting on Thorn’s statement, Bloomberg ETF analyst Eric Balchunas said XRP ETFs will be fired if Kamala Harris wins the White House.

Close to zero if Harris wins, I agree. Trump victory and anything is possible on that front IMO.

— Eric Balchunas (@EricBalchunas) October 1, 2024

However, an outright rejection may not be warranted, as how the Harris administration will handle crypto regulation remains uncertain.

Harris has publicly expressed his support for emerging technologies, including crypto, showing a desire to spur innovation while protecting consumers. Ripple co-founder Chris Larsen is among prominent industry figures who have voiced support for Harris.

“I suppose if the SEC appeals, but Harris wins, there is a possibility that the SEC will eventually withdraw the appeal,” Thorn added. “I’ll be shocked if I don’t appeal before next Tuesday, though.”

Share this article