SEC’s Acknowledgment of XRP ETF Applications Raises Classification Questions

The classification of XRP continues to be a hot topic in the cryptocurrency industry. A recent discussion led by FOX Business journalist Eleanor Terrett shed light on the U.S. Securities and Exchange Commission’s (SEC) position regarding XRP, particularly in the context of exchange-traded fund (ETF) applications.

Terrett noted that the SEC has acknowledged ETF proposals that categorize XRP as a commodity asset, similar to Bitcoin (BTC) and Ethereum (ETH). However, she emphasized that this acknowledgment does not necessarily indicate that the SEC officially classifies XRP as a commodity.

SEC’s Expanding Regulatory Scope for Digital Assets

The SEC’s decision to review XRP-based ETF applications signals a shift in how the agency interacts with cryptocurrency products. ETF sponsors have used Bitcoin and Ethereum’s existing regulatory frameworks as models for submitting XRP-based products.

However, Terrett clarified that the SEC’s acceptance of these filings does not automatically define XRP’s regulatory status.

Interestingly, the SEC has recently allowed the approval of Solana (SOL), Dogecoin (DOGE), and Cardano (ADA) ETFs, despite initially categorizing these assets as securities. This development suggests a broader willingness by the regulatory agency to expand its oversight of various digital assets beyond its earlier rigid classifications.

Regulatory Uncertainty and Legal Considerations

Despite the SEC’s willingness to process XRP-based ETF applications, the asset’s regulatory uncertainty persists. Terrett highlighted that the SEC has put some of its crypto-related legal actions on hold as it reevaluates its overall regulatory approach to digital assets.

A key factor contributing to this uncertainty is the July 2023 federal court ruling, which stated that XRP was not a security when traded on secondary markets. However, the SEC has not yet made a final decision on whether XRP should be classified as a security or a commodity, leaving the industry in a state of ambiguity.

This legal pause aligns with broader trends in the crypto sector, where ongoing lawsuits and regulatory shifts continue to shape the landscape. By acknowledging XRP-related ETF applications, the SEC may be attempting to avoid accusations of bias while also reassessing its stance on digital asset classification.

Conclusion

The SEC’s acknowledgment of XRP ETF applications represents a notable step forward, but it does not necessarily confirm XRP’s status as a commodity. The agency’s regulatory framework for cryptocurrencies remains fluid, with XRP’s classification still under review.

As legal proceedings and regulatory discussions evolve, investors and industry participants will closely monitor the SEC’s next moves, which could have significant implications for XRP and the broader cryptocurrency market.