Key Takeaways
- Chad Steingraber, an XRP supporter, pointed out that the Teucrium XRP ETF came into effect without being directly approved by the SEC, because the deadline had passed.
- Fox reporter Eleanor Terrett explained that the Teucrium ETF was registered under the 40 Act, not spot ETFs which are registered under the 33 Act.
- The current U.S. government shutdown may delay all SEC activities on all its pending applications with six XRP ETF decisions to be held in October.
Speculation around potential XRP ETF launch intensified this week after a post by Ripple supporter Chad Steingraber reignited debate on how these funds might move forward amid the ongoing U.S. government shutdown.
Community Speculates On XRP ETFs Launch Without SEC Approval
As Steingraber reminded the community in a recent post on X, the Teucrium XRP ETF was not SEC approved directly. “They reached the deadline and the SEC didn’t ‘approve or deny’ the listing,” he wrote. He noted that the fund automatically became effective when the regulatory deadline had lapsed.
Steingraber made a comment that attracted a lot of attention with six XRP ETF proposals awaiting a decision in October. The applications being pending are Grayscale (decision date would be Oct. 18), 21Shares (decision date would be Oct. 19), Bitwise (decision date would be Oct. 22 ), Canary Capital (decision date would be Oct. 23), CoinShares (decision date would be Oct. 23), and WisdomTree (decision date would be Oct. 24).
Nevertheless, the recent U.S. government shutdown that has happened this month has thrown a few ETF approvals into limbo. The SEC, the regulator of ETF filings, has had to miss some of its important deadlines when federal funding negotiations failed in congress. The episode of shutdown in late 2018 was the longest in history (35 days) but the current one already casts doubt on the duration of regulatory operations being stalled.
Expert Clears the Air
FOX journalist Eleanor Terrett intervened to sort out the mess around the Teucrium case. In a reply to the post by Steingraber she pointed out that the case of the Teucrium fund is not indicative of all ETF filings, particularly spot-based ones. “Adding some context here for those asking if this applies to all ETFs, including the spots. The short answer is no,” Terrett explained in her X post.
She explained that the Teucrium XRP ETF contains Treasuries, cash, and swap receivables, and this made it to fall under the Investment Company Act of 1940 otherwise referred to as the 40 Act. “That means the SEC didn’t need to actively approve it, just let it go effective,” she said.
Terrett further wrote that the SEC frequently permits ETFs based on futures to become effective automatically upon expiration of the statutory review period. But she made a keen line delineation in the case of spot ETFs, which come under the same Act as Securities, the 1933 Act. These, she said, are registered as commodity trusts and thus must have express SEC approval before they are allowed to trade.
Due to this, the XRP community might need to wait until the government shutdown before further developments. “Spot crypto ETFs ($LTC, $SOL, $XRP) won’t begin trading until the SEC can declare the S-1s effective,” Terrett noted. She added that this will only occur once the agency resumes normal operations. With the deadlines approaching with regulatory functions paused, the XRP market remains on watch for the SEC’s next move or its silence.
Read More: SEC Misses Deadline for Canary Capital’s Spot Litecoin ETF Amid Government Shutdown
