SEC Delays XRP Spot ETF Approvals Amid U.S. Government Shutdown, Raising Questions About Future Regulatory Decisions

The U.S. Securities and Exchange Commission (SEC) has postponed decisions on multiple proposed spot Exchange-Traded Funds (ETFs) linked to XRP, stemming from the ongoing federal government shutdown. Originally scheduled for October, these critical rulings are now delayed, sparking speculation about the SEC’s approval strategies for cryptocurrency ETFs once normal government operations resume.

XRP Spot ETFs Caught in Shutdown Gridlock

In an October 4 report by U.Today, the SEC was poised to issue rulings this month on six XRP spot ETFs. The proposals and their original decision dates include:

• Grayscale XRP ETF – October 18
• 21Shares Core XRP Trust ETF – October 19
• Bitwise XRP ETF – October 22
• Canary Capital XRP ETF – October 23
• WisdomTree XRP ETF – October 24
• CoinShares XRP ETF – October 23

However, the U.S. government shutdown has disrupted federal agency functions, including the SEC’s review process. Without active governance, the timelines for evaluating these ETF applications are now extended indefinitely. The resulting delay has stoked widespread debate within financial markets and the cryptocurrency space, particularly around how this will influence the approval or rejection of XRP ETFs in the near future.

This development evokes memories of a prior federal shutdown in late 2018, which endured for 35 days and caused significant delays across multiple government functions. As of now, it remains unclear how long the current shutdown will persist or whether it risks the SEC missing statutory deadlines for action on pending ETF reviews.

The Teucrium XRP ETF: A Unique Case or a Policy Precedent?

Adding to the discourse, Fox Business cryptocurrency journalist Eleanor Terrett has addressed ongoing concerns regarding the SEC's regulatory posture toward XRP ETFs. Responding to a tweet from XRP community advocate Chad Steingraber, Terrett weighed in on the distinct regulatory handling of the Teucrium XRP ETF and whether it offers insights for the current situation.

Steingraber referenced the Teucrium ETF's path to listing, where the SEC neither formally approved nor rejected the product, allowing it to take effect automatically after regulators failed to respond within the statutory window. This process has fueled speculation that some XRP ETFs might follow suit.

However, Terrett clarified key distinctions between the Teucrium ETF and currently pending XRP spot ETFs. The Teucrium product is not classified as a true spot ETF. Instead, it is a commodity-focused fund comprised of U.S. Treasuries, cash, and swap receivables. Crucially, it was registered under the Investment Company Act of 1940 (40 Act), which permits funds to automatically take effect without active SEC consent.

In contrast, XRP spot ETFs are filed under the Securities Act of 1933 (33 Act) as commodity trusts, a designation that mandates explicit SEC approval. “The SEC tends to let products under the 40 Act become effective once the statutory waiting period lapses, without requiring active approval. However, XRP spot ETFs fall into a different category, necessitating deliberate SEC action,” Terrett explained.

This fundamental difference underscores the regulatory complexity facing XRP ETF applications, which remain tethered to more stringent oversight protocols than those governing products like Teucrium’s.

Market Implications of Shutdown-Induced Delays

Beyond XRP, the SEC’s operational hiatus during the extended shutdown is also impacting the broader scope of cryptocurrency ETFs tied to popular assets like Litecoin (LTC) and Solana (SOL). These spot ETFs require the SEC to declare their S-1 filings "effective" before trading can commence. The shutdown has effectively paused this approval pipeline, leaving critical applications in limbo and delaying market decisions indefinitely.

With the SEC temporarily sidelined, market participants are bracing for continued uncertainty surrounding cryptocurrency ETFs. Key questions remain about whether the agency will opt for a unified wave of approvals for multiple ETF proposals upon its return to normal operations or whether additional delays will plague individual applications moving forward.

The Road Ahead for XRP Spot ETFs

Investors and industry experts are monitoring the situation closely, as XRP's regulatory future holds broader implications for the cryptocurrency sector at large. The SEC’s eventual handling of pending spot ETFs, including its decision-making criteria and approval timelines, will likely set critical precedents for future financial products tied to digital assets.

Until the federal government reopens and the SEC resumes operations, the market is left to speculate on the fate of XRP ETFs and their impact on the broader cryptocurrency industry. For now, the resolution of the government shutdown remains the first step in untangling the regulatory standing of these high-profile proposals.