SEC Postpones Determinations on Spot Dogecoin and XRP Exchange-Traded Fund Applications
The U.S. SEC has elected to defer its conclusive decisions regarding the potential approval for trading of spot ETFs that would provide investors with direct exposure to the altcoins (DOGE) and XRP, the digital asset affiliated with Ripple.
Extended Review Period for Specific Altcoin ETF Proposals
In official communications released on Tuesday, the principal U.S. financial markets regulatory body announced an extension of its evaluation period for several specific proposed investment vehicles: the 21Shares Core XRP Trust, the Grayscale XRP Trust, and the Grayscale Dogecoin Trust.
This delay pushes back the original decision dates, which were set for May 21-22, giving the Commission more time to carefully check if these proposals meet the requirements of Exchange Act Section 6(b)(5). This section mandates that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest.
Details of Proposed ETF Structures and Underlying Assets
The Cboe and NYSE, which are the designated listing exchanges for the 21Shares and Grayscale funds, respectively, had submitted their applications for necessary rule amendments earlier in the current year. The 21Shares Core XRP Trust is structured to track the CME CF XRP-Dollar Reference Rate, with asset custody to be provided by Coinbase Custody.
Grayscale’s proposed Dogecoin Trust would benchmark against CoinDesk’s Dogecoin Price Index, while its counterpart, the Grayscale XRP Trust, would follow CoinDesk’s XRP Price Index.
As of May 21, Dogecoin, recognized as the earliest and most prominent memecoin by market capitalization, held a valuation of approximately $33.7 billion, according to data compiled by CoinGecko. XRP, the native token of the XRP Ledger blockchain network, possessed a market capitalization of around $138 billion on the same date, as per CoinGecko.
The SEC, in its statement, clarified that the “institution of proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved.
Rather, the Commission seeks and encourages interested persons to provide comments on the proposed rule change.”
Anticipated Nature of Regulatory Delays in Crypto ETF Approvals
The SEC’s postponement of rulings on many cryptocurrency ETF proposals has become a consistent pattern recently, as the agency undertakes the complex task of reviewing dozens of such applications.
While there are observations of a potentially more accommodative regulatory stance towards digital assets under a previous (Trump) administration, and recent developments such as the dismissal of certain enforcement actions against crypto firms and engagements between the SEC’s crypto task force and industry representatives under the current administration might suggest evolving perspectives, such deferrals in decision-making remain a common occurrence.
James Seyffart, an ETF analyst at Bloomberg Intelligence, has indicated that delays by the SEC concerning spot crypto ETFs are largely to be expected.
In a May 20 social media post on X, Seyffart posited that any preliminary approvals from the SEC for these types of assets would likely not materialize before late June or early July at the absolute earliest, with a more probable timeline extending into the early fourth quarter.
He further emphasized the SEC’s customary practice of utilizing the full statutory period allowed for responses, a tendency observed irrespective of the particular leadership at the Commission.
Seyffart noted that the final due dates for the majority of these filings fall in October, thereby positioning any early decisions as deviations from standard procedure, regardless of the current SEC’s perceived “crypto-friendly” inclination, and consequently dismissing notions of any underlying “conspiracy.”
Also Read: The US SEC delays 21Shares and Bitwise Solana ETF decisions
