SEC Acknowledges Grayscale’s XRP and Dogecoin ETF Filings, Decision Deadline Set for October

The U.S. Securities and Exchange Commission (SEC) has officially acknowledged filings from crypto asset manager Grayscale to list spot XRP and Dogecoin exchange-traded funds (ETFs). This marks a significant step forward in the ongoing efforts to bring crypto assets into the mainstream financial markets through ETF products.

On February 13, the SEC acknowledged Grayscale's Form 19b-4 filings for the Grayscale XRP Trust and Grayscale Dogecoin Trust, triggering a review process with a mandated 240-day deadline. The clock will begin ticking once the filings are officially published in the SEC’s federal register, which is expected to occur in the coming days. If the filings are entered promptly, the SEC’s decision on whether to approve or reject the ETF applications would be due by mid-October.

This development comes after the SEC also acknowledged filings for ETFs involving Litecoin (LTC) and Solana (SOL) earlier this month. These actions signal a potential shift in the SEC's approach to crypto-related ETF listings, reflecting a more accommodating stance under the current leadership compared to the administration of former SEC Chair Gary Gensler, who was known for blocking several crypto-related ETF proposals. Notably, Grayscale’s battle to convert its Bitcoin Trust into an ETF was a lengthy legal struggle that only recently gained traction.

Grayscale’s XRP and Dogecoin ETF Proposals: Outlook and Challenges

Bloomberg ETF analysts James Seyffart and Eric Balchunas have predicted a relatively favorable outlook for the approval of the XRP and Dogecoin ETFs. According to their analysis, the likelihood of the XRP ETF being approved by 2025 is around 65%, while the Dogecoin ETF has a higher probability, with a 75% chance of approval by the same year. Additionally, the analysts have given a 90% probability that the Litecoin ETF will be approved before the end of 2024.

However, challenges remain, particularly with the ongoing legal battle surrounding XRP’s classification. In August 2023, Ripple Labs scored a partial victory when a court ruled that XRP was not a security when sold on secondary markets. Despite this, the SEC appealed the ruling, arguing that Ripple violated securities laws by selling XRP to retail investors. This unresolved lawsuit could delay the approval of the XRP ETF until the legal matter is fully settled.

In contrast, Dogecoin’s path to SEC approval may be more straightforward. The regulatory uncertainty surrounding Dogecoin is less pronounced, as the SEC has yet to declare whether it considers Dogecoin a security. Dogecoin also shares many characteristics with Bitcoin, a cryptocurrency that has already been approved for ETFs, which could work in its favor.

A Shift in Regulatory Attitudes

The SEC’s decision to acknowledge and review Grayscale’s filings reflects a broader shift in regulatory attitudes toward cryptocurrency. Under the leadership of current SEC Chair Gary Gensler, the agency has become more open to considering cryptocurrency-based financial products, especially as the market for digital assets continues to grow.

The upcoming decisions on Grayscale’s XRP and Dogecoin ETFs will be closely watched by the crypto industry, investors, and regulators alike. If approved, these ETFs would mark another milestone in the integration of cryptocurrencies into traditional financial markets, further legitimizing digital assets as an investment class.

As the SEC continues to assess crypto asset ETFs, the industry is hopeful that regulatory clarity will increase, paving the way for more crypto-based financial products in the future. The mid-October deadline for the XRP and Dogecoin ETFs will likely serve as a key moment in the evolving relationship between cryptocurrency and traditional finance.