XRP ETF? Ripple CEO Slams SEC Chair Gary Gensler

While we're still trying to absorb all the Bitcoin ETF euphoria, XRP ETFs could already be emerging. Like a dog with a bone staring at his reflection, institutional investors aren't stopping with Bitcoin ETFs.

Data from Coinshares shows volume in XRP has surged 244% in inflows with $2.2 million flooding in. The previous week only saw $900,000. The figure comes as digital asset investment products saw $1.18bn inflows last week. Trading volumes were $17.5bn in the same period, marking the highest on record. 2022 saw an average of $2bn per week.

XRP's surge is thought to be a result of speculation that an XRP ETF is on the cards.

The appetite for an XRP ETF was briefly exposed last year when a fake Delaware corporation registry document for the iShares XRP Trust was leaked to the public. Ripple's XRP jumped 10% as a result.

The document mirrored those that BlackRock legitimately filed ahead of its applications for?Bitcoin?and?Ethereum?ETFs.

Now that Bitcoin ETFs have officially been approved by the SEC, the chance of an XRP has suddenly become increasingly more realistic.

On Wednesday, Steve McClurg, Chief Investment Officer at Valkyrie, hinted at the possibility of an Ethereum and Ripple ETF.?“I think we’re going to see a lot of filings come out for Ethereum," he said. "I even think we might see something for Ripple given the recent progress.”

Andos Finance co-founder also chimed in on X, declaring, “An XRP ETF is only a matter of time.”

Grayscale's Good News

Moves have already been made towards an XRP ETF. Last week, Grayscale re-included XRP in its Grayscale Digital Large Cap (GDLC) Fund last week.

"Grayscale has adjusted GDLC’s portfolio by selling certain amounts of the existing Fund Components in proportion to their respective weightings, and using the cash proceeds to purchase Avalanche (AVAX) and XRP. As a result of the rebalancing, Polygon (MATIC) has been removed from GDLC," the firm said in a statement.

Grayscale's Bitcoin ETF was one of the eleven approved by the SEC last week. However, the fund has seen outflows totaling about $579 million compared to the other Bitcoin ETFs, which have pulled in a total of nearly $1.4 billion.

Like Ripple, Grayscale has also had a patchy relationship with the SEC. Last year, the SEC rejected Grayscale's proposal but the court concluded that the regulatory body failed to demonstrate how the digital asset management firm's product was different from approved futures-based funds.

However, also like Ripple, Grayscale scored a victory against the regulator. The U.S. Court of Appeals for the D.C. Circuit has sided with?Grayscale, ruling that the SEC must review its application to transform its Bitcoin Trust into an ETF.

In October, the SEC dropped its charges against Ripple's top executives, Chris Larsen and Brad Garlinghouse.

The regulatory body had previously accused the duo of aiding Ripple in violating federal securities laws concerning XRP crypto transactions.

SEC, Wait And See

Although Ripple scored a monumental victory last year in its battle against the SEC, the war is far from over.

XRP ETF skeptics believe the product won't hit the market until Ripple fully resolves its case with the SEC.

Come 12 February 2024, the Ripple-SEC battle will reach a pivotal “remedies phase.” On that date, a comprehensive examination of Ripple's alleged offenses will commence. The SEC will present its brief on potential remedies for Section 5 violations by 13 March 2024. Ripple will then submit its opposition by 12 April 2024 with the SEC's final response due by 29 April 2024.

It's a crucial timeline as Ripple could face a fine of up to $770 million. Whilst the fate of XRP is yet to be determined, the SEC's decision could establish a standard for the regulation of digital assets in the United States. The SEC dismissing allegations against Ripple signals a change in the wind, suggesting the regulator could be becoming more accommodating to the sector.

In a legal document filed on 13 November 2023, Judge Torres set a completion deadline for the discovery process and responses related to the remedies sought by the SEC in the ongoing legal proceedings for 29 April 2024.

Bloomberg’s ETF analyst James Seyffart believes an XRP ETF won't even be seen this year.

“That’s not happening this year unless the court case is completely done. There’s still challenging this in court. It’s not completely done. The SEC is literally fighting against Ripple in court,” stated Seyffart.

In Brad We Trust

Ripple CEO Brad Garlinghouse has never been one to bite his tongue, especially when it comes to the SEC. In the past, Garlinghouse described the regulator's actions as "a ruthless attempt to personally ruin us and the company."?

Other timeless quotes about the SEC include, "The SEC declared war on Ripple. We're trying to defend ourselves," “One thing I think we all learned is that it takes a village to fight a bully, and this village beat the bully,” and, "The?SEC?is fundamentally wrong as a matter of law and fact.”

Now, Garlinghouse has even outdone himself. Speaking at the World Economic Forum in Davos, of all places, Garlinghouse took a swing at SEC Chairman Gary Gensler.

“I do think the chair of the SEC, Gary Gensler, is a political liability in the United States," Garlinghouse declared. "And I think he’s not acting in the interests of the citizenry, he’s not acting in the interests of the long-term growth of the economy, and I don’t understand it.”

“I think at some point there will be a new chair of the?SEC, and I think that will be a good thing for the American people.”

As brash as Garlinghouse's language continues to be, his tone against the US regulator is appreciated in the Ripple and XRP community.

Garlinghouse also told CNBC that other cryptocurrency ETFs are a "certainty" but did not offer a timeline nor clarification if he was referring to XRP.

“The reality is we have a Bitcoin ETF only because a U.S. court said to the SEC, ‘You’re being arbitrary and capricious in your application of the law.‘ What would be sad is if every ETF had to go through that same journey and for Gary Gensler to get smacked down by the U.S. court system again, but that might be necessary,” Garlinghouse added.

In any case, if an XRP ETF was on the cards, you'd know Garlinghouse would be fighting tooth and nail for its approval.