The community is monitoring
Courts are watching closely after Judge Torres denied a joint request from Ripple and the U.S. Securities and Exchange Commission (SEC), meaning the lawsuit - ongoing since 2020 - will continue.
The decision has already cost more than $2 billion in market value within just 24 hours. However, Fred Rispoli, the attorney supporting Ripple, says this recent setback will not jeopardize the hopes for spot ETFs - at least not directly.
Rispoli does not believe the rejection will affect the status of the XRP in the secondary market, which is the critical factor in ETF approval. Although the headlines might lead you to believe otherwise, he sees no legal reason preventing the SEC's court ruling from moving forward with the spot XRP ETF.
He asserts that the court ruling only matters if the SEC wants it to matter, and the agency could easily waive the restrictions or choose not to enforce them. The most important question, from his perspective, is whether the new leadership of the SEC is willing to change its approach.
Behind the scenes
He added that there are indications that Ripple and the U.S. Securities and Exchange Commission (SEC) are heading toward a quiet settlement, perhaps in exchange for a reduced fine, with Ripple changing its practices regarding institutional sales. This would keep the original Torres ruling in place while easing regulatory tension.
Ripple has already made changes, as its legal team describes past violations as a "historic institutional sale," indicating their attempt to separate current operations from past practices.
Exchange-traded fund analysts are relieved. Eric Balchunas and James Seyffart of Bloomberg recently stated that the odds of approval for XRP and spot ETFs in 2024 exceed 90%, indicating that the U.S. Securities and Exchange Commission (SEC) is engaging in further communications with potential issuers.
If this situation continues, Rispoli may be right: the ETF option is still on the table, even with all the legal controversy.