SEC Opens Public Comment Period for XRP ETF Applications from Grayscale and Bitwise

• The SEC opened public comment periods for Grayscale and Bitwise XRP ETF applications with an August 22 deadline. 

• Both funds received Trading Division approval but face stay orders that keep them from launching. 

• Grayscale argues that the SEC lacks authority to enforce the stay order and claims automatic approval under federal law.

The Securities and Exchange Commission has initiated a formal review process for two cryptocurrency funds that include XRP holdings, marking a significant development in the spot XRP ETF approval timeline. The regulatory agency announced comment periods for Grayscale’s Digital Large Cap Fund and Bitwise’s Crypto Index Fund through Federal Register notices.

Both funds received preliminary approval from the SEC’s Trading Division but remain under stay orders pending Commission review. Public stakeholders have until August 22 to submit statements supporting or opposing these applications.

Grayscale GDLC Fund Faces Regulatory Review

Grayscale’s Digital Large Cap Fund allocates 5.99% of its portfolio to XRP alongside Bitcoin, Ethereum, Solana, and Cardano. The New York Stock Exchange received approval to list and trade GDLC shares on July 1, but the Commission immediately imposed a stay order.

The asset manager has challenged this regulatory action, arguing the SEC lacks authority under Section 19b of the Exchange Act to issue such stays. Grayscale contends that the 240-day approval deadline expired on July 1, triggering automatic approval when the Commission failed to render a decision within the statutory timeframe.

The company maintains that Section 19b supersedes Commission Rules of Practice, making the stay order legally invalid. This legal argument could establish important precedents for future cryptocurrency ETF applications if they are successful.

Bitwise Fund Also Under Commission Scrutiny

The SEC simultaneously opened comments for Bitwise’s 10 Crypto Index Fund, which holds XRP as 5.9% of its total allocation. The BITW fund tracks ten digital assets, including Bitcoin, Ethereum, Solana, Cardano, Sui, Chainlink, Avalanche, Litecoin, and Polkadot.

Like Grayscale, Bitwise received Trading Division approval for NYSE listing but faces an active stay order. The Commission confirmed that both stay orders remain effective pending further regulatory determination.

The Bitwise fund represents a diversified approach to cryptocurrency exposure, offering investors access to multiple digital assets through a single regulated investment vehicle.

Bloomberg analyst James Seyffart indicated clearer regulatory direction should emerge before the month-end following the August 22 comment deadline. The outcome could influence broader cryptocurrency ETF approval processes and establish regulatory frameworks for multi-asset digital funds.

Eric Balchunas, another Bloomberg analyst, projects potential approval for dedicated XRP-only spot ETFs by September or October. These single-asset funds would provide direct XRP exposure without the diversified holdings structure of current applications.

The Commission’s review process is critical for XRP market access through traditional investment channels. Approval would mark XRP ETF availability’s first spot for institutional and retail investors seeking regulated cryptocurrency exposure.