Nikolas Sargeant
In a groundbreaking development for cryptocurrency investment vehicles, the Securities and Exchange Commission has formally acknowledged Grayscale's applications to convert its XRP and Dogecoin Trusts into Exchange-Traded Funds (ETFs). This unprecedented move, marked by Thursday's regulatory notice, requests public input on the proposed rule changes under NYSE Arca Rule 8.201-E for both trusts.
The SEC's newfound openness to crypto innovation represents a significant departure from its previous stance. This shift becomes particularly evident when contrasted with December's events, where exchanges withdrew their Solana 19b-4 applications due to limited engagement from the prior SEC leadership. While new cryptocurrency ETF filings for assets like Litecoin, Dogecoin, Solana, and XRP must still complete the full approval process, the initial acknowledgment suggests a more receptive regulatory environment.
The regulatory landscape continues to evolve as the cryptocurrency market matures, with the SEC likely to evaluate additional XRP ETF applications from industry players including Bitwise, 21Shares, Canary, and WisdomTree. The formal review period, which begins once Grayscale's ETF filing appears in the Federal Register, can extend up to 240 days, marking a crucial phase in the regulatory timeline.
Bloomberg ETF analyst James Seyffart's insights highlight the significance of this regulatory shift. According to Seyffart, approval probabilities vary across different cryptocurrencies, with Litecoin leading at 90%, followed by XRP at 70%, Solana at 70%, and Dogecoin at 65%. However, he cautioned that an XRP ETF's approval might hinge on the resolution of Ripple's ongoing litigation with the SEC.
The momentum in crypto ETF applications continues to build, with the SEC recently acknowledging and seeking public feedback on spot Solana ETF applications from various financial institutions, including Canary, VanEck, Bitwise, and 21Shares. This latest development suggests a potential transformation in how digital asset investment products are regulated and offered to investors.
