XRP’s ‘Legal Clarity’ Has a Catch – Banks Still Fear Torres’ Institutional-Sales Label
Six months after the SEC formally ended its crusade towards Ripple, a paradox has gripped the desk: U.S. establishments are aggressively dumping direct XRP publicity whereas concurrently lining up for the ETF launch.
At the time of writing, XRP was buying and selling at $1.22, closely discounted from its July 2025 peak of $3.65.
Despite the “authorized readability” celebrated in August, institutional conviction seems fractured. While Bitwise and WisdomTree up to date their S-1 filings in October—pushing approval odds to a near-certain 95%—institutional Futures Open Interest (OI) has collapsed 73% because the settlement.
The Evidence
The Settlement: The August 2025 Joint Stipulation finalized a $125 million penalty for historic institutional gross sales. Additionally, the SEC dropped its appeals, cementing the 2023 abstract judgment that public gross sales will not be securities.
The Divergence:
- ETF Flows: Grayscale’s conversion filing for
GXRP(Nov 2025), And Bitwise’s Amendment No. 4 signifies imminent approval. - Direct Flows: On-chain information flags a $405,000 web outflow from institutional wallets within the final 24 hours alone.
Reaction & Outlook
The Paul Atkins Factor: The new SEC Chair’s “Project Crypto” initiative has deprioritized enforcement, however banks stay paralyzed by the particular wording of Judge Torres’ ruling: direct gross sales to establishments are securities.
BREAKING:
SEC LAUNCHES PROJECT CRYPTO TO MOVE ALL MARKETS ONCHAIN. pic.twitter.com/BNRqB2M6hE
— Crypto Rover (@cryptorover) July 31, 2025
Next Step: The market is pricing in a spot ETF approval by Q2 2026. Until then, liquidity stays skinny.
The Institutional Take
Don’t misinterpret the futures collapse as bearishness; it’s a compliance rotation. The Torres ruling created a poisonous asset class for U.S. banks: holding XRP instantly on a stability sheet nonetheless carries “institutional gross sales” stigma.
The ETF is the loophole. It wraps the “soiled” underlying asset in a “clear” securities construction (19b-4). Smart cash is dumping the token to front-run the ETF, successfully swapping compliance danger for a 34bps administration price. Expect OI to stay lifeless till the ETF goes dwell.
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