The US SEC has formally recognized applications from Grayscale Investments to launch new spot ETFs based on XRP and Dogecoin. This recognition could reflect a shift in the agency’s regulatory stance towards cryptocurrencies and open the door to greater institutional participation in the digital market.
The U.S. Securities and Exchange Commission (SEC) has officially recognized applications submitted by Grayscale to launch two more cryptocurrency exchange-traded funds (ETFs). The digital asset investment firm’s applications were officially recognized by the agency on February 13, an announcement that marked the beginning of the formal review process for both proposals, the potential approval of which could revolutionize the way investors access these cryptocurrencies.
Grayscale Investments, known for being one of the leading companies in digital asset management, had submitted these applications as part of its strategy to expand its offering of financial products based on cryptocurrencies. Although the SEC has a deadline of 240 days to approve or reject these applications, the mere fact that they have been officially recognized suggests that we are facing a possible change in the regulator's stance towards the cryptoasset market.
This development coincides with a context in which the SEC appears to be taking a more open attitude towards cryptocurrencies. Hester Peirce, one of the SEC's commissioners, has been a prominent voice in this regard, stating recently that the agency is working to put aside its controversial enforcement policy and establish clearer and more consistent regulations to govern the crypto market.
With the potential approval of these ETFs, both institutional and retail investors could gain easier and more regulated access to the XRP and Dogecoin markets, which could boost the adoption of these cryptocurrencies on a large scale.
SEC changes its approach and becomes “more open”
In recent years, the SEC has maintained a cautious and restrictive attitude towards cryptocurrencies, which has generated tensions with companies in the sector and advocates of financial innovation. However, recent moves, following the inauguration of Donald Trump on January 20 and the appointment of Mark Uyeda as its interim chairman, suggest that the regulator may be opening up to the possibility of integrating crypto assets into traditional financial markets.
One of the clearest indicators of this shift, aside from the creation of a crypto-asset working group, is the recognition of several of the exchange-traded fund applications that management firms, including Grayscale, have been submitting. The firm is seeking regulatory approval to offer its investors new ETFs based on XRP and Dogecoin, the most capitalized memecoin on the market. Although the SEC has a 240-day window to evaluate these proposals, the mere fact that these applications have been accepted for formal review represents significant progress.
Peirce, known as “Crypto Mom” for her pro-Bitcoin and crypto stance, recently highlighted that the SEC is working to develop a clearer and more consistent regulatory framework, allowing companies to operate within a more predictable environment. The approach the commissioner speaks of contrasts with the more restrictive attitude the SEC has taken in the past, especially when it comes to cryptocurrency ETFs. Although the approval of a Bitcoin ETF in early 2024 marked an important milestone, the regulator has been slower when it comes to other cryptocurrencies.
Now, with Grayscale’s applications for XRP and Dogecoin, the SEC has a chance to show that it is willing to approach the crypto market more comprehensively. While approval of these ETFs is not guaranteed, the acknowledgment of the applications suggests that the regulator is willing to reconsider its approach to digital assets.
The potential impact of XRP and Dogecoin ETFs
If Grayscale’s proposed ETFs are approved, they are expected to have a significant impact on the liquidity and accessibility of XRP and Dogecoin. Currently, these digital assets are primarily available on cryptocurrency exchanges, which may present a challenge for traditional investors. However, their entry into the stock markets through a listed ETF, as proposed by Grayscale, would offer a more familiar and accessible alternative for interested institutional and retail investors.
BUY RIPPLEFurthermore, the approval of these ETFs could act as a catalyst for the arrival of other financial products based on cryptocurrencies. Companies such as 21Shares, Bitwise, Canary Capital and WisdomTree have also submitted applications for ETFs for XRP, Solana, Cardano, Litecoin and other cryptocurrencies, including memecoins Bonk and Trump, suggesting a growing interest from the private sector in offering innovative solutions for investors.
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However, it is important to note that the approval process will not be straightforward. The SEC must carefully assess the risks associated with cryptocurrency ETFs, including market volatility, security risks, and potential manipulations. Furthermore, in the case of XRP, the legal situation between Ripple and the SEC remains a factor of uncertainty that could influence the final decision.
An expected change in financial regulation
The recognition of Grayscale’s applications for XRP and Dogecoin ETFs falls within a broader context of regulatory evolution in the United States. Since President Trump took office, the government has been working to develop a clearer, more technologically neutral legal framework that allows for innovation, including in cryptocurrencies. So far, the US president has signed an executive order focused on crypto assets and has ordered an evaluation of possible ways to facilitate their integration into traditional financial markets.
In this context, Peirce, who has been appointed leader of the SEC's new digital assets task force, is advocating for the agency to take a more flexible approach and adapt to technological innovation. According to Peirce, the SEC should focus on providing clear regulations that protect investors without stifling innovation.
Now, with the recognition of the XRP and Dogecoin ETF proposals, the SEC could be sending a desired signal that it is willing to allow crypto assets to be integrated into traditional financial markets. This would not only benefit the companies offering these products, but would also facilitate the adoption of cryptocurrencies by more conservative investors.
PREPARE YOUR WALLETIn addition to Grayscale's filings, the agency has also recognized Canary Capital's application to launch a Litecoin spot ETF, and BlackRock's application to integrate the Refunds in kind in its iconic iShares Bitcoin Trust (IBIT), which manages more than $114.400 billion to date.
Investing in cryptoassets is not fully regulated, may not be suitable for retail investors due to high volatility and there is a risk of losing all invested amounts.
