The U.S. Securities and Exchange Commission (SEC) is nearing its deadline to appeal the 2023 court decision on XRP. In July 2023, Judge Analisa Torres ruled that the digital asset is not a security when traded on secondary markets, providing clarity on the asset’s legal classification. The SEC has until October 7, 2024, to appeal this ruling.
Notably, Bitwise, a prominent asset management firm, has filed to list XRP ETF. However, many experts remain uncertain about the outcome. Alex Thorn, head of research at Galaxy, expressed skepticism about the SEC’s decision. He believes there is a strong likelihood that the SEC will file an appeal, which could significantly reduce the chances of an XRP ETF being approved.
Strategic Move Ahead of 2024 Elections
Eric Balchunas, a senior ETF analyst at Bloomberg, offered an interesting perspective on the potential approval of the ETFs. He likened the recent filings for cryptocurrency ETFs, such as those tied to XRP, to a strategic decision influenced by the upcoming U.S. presidential election. Balchunas suggested that these filings may represent a calculated risk, banking on the possibility of Donald Trump winning the election.
According to Balchunas, the logic behind these filings is that a Trump victory could bring about a more favorable regulatory environment for the cryptocurrency industry, increasing the likelihood of success for ETFs.
SEC’s Appeal and Regulatory Landscape
An appeal would likely extend the uncertainty surrounding the token’s legal status and hinder progress for asset managers like Bitwise. Thorn noted that an appeal could severely reduce the odds of an XRP ETF receiving approval.
At the same time, Balchunas explained that most regulatory uncertainty surrounding cryptocurrency is connected to the current administration’s stance. Under SEC Chair Gary Gensler, the regulatory environment has remained stringent, with the SEC taking a cautious approach to crypto-related products.
Should there be a change in leadership at the SEC, potentially triggered by the outcome of the 2024 election, the regulatory framework could shift significantly.
Political Influence on Crypto Regulation
The 2024 presidential election has generated considerable speculation about the future of cryptocurrency regulation in the U.S. Among the two major candidates, Donald Trump’s emergence is expected to favor the crypto industry.
This has led to increased optimism among some of the token supporters who believe a Trump presidency could result in a more lenient regulatory environment.
In contrast, Balchunas observed that if Kamala Harris were to become president, it is likely that the current level of scrutiny under Gensler’s leadership would continue. A Harris administration could maintain the SEC’s cautious stance on approving cryptocurrency ETFs.
Charles Hoskinson, founder of Cardano, has also weighed in on the issue. At the TOKEN2049 conference, he emphasized the importance of having a pro-crypto leader in the White House.
Hoskinson argued that candidates who support decentralized finance (DeFi) and blockchain initiatives would likely be more advantageous for the industry. He further suggested that a Trump administration could bring significant changes to the regulatory landscape, benefitting the broader cryptocurrency market.
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With the SEC’s deadline to appeal the asset’s ruling fast approaching, the future of cryptocurrency regulation in the U.S. remains uncertain. The outcome of the 2024 presidential election could play a pivotal role in shaping this regulatory landscape, particularly about XRP ETFs.
While there is the possibility of an appeal by the SEC, industry analysts continue to speculate on how political leadership might impact the approval process for cryptocurrency ETFs. For now, firms like Bitwise are positioning themselves in anticipation of a potential shift in the regulatory environment, with the outcome of the election being a crucial factor.
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