Following the US government shutdown, claims spread rapidly on social media that some cryptocurrency ETFs, particularly an XRP ETF, were automatically approved due to the restrictions placed on securities regulator SEC operations.
These claims, which spread on social media, claimed that the XRP ETF application prepared by Teucrium was not directly approved by the SEC, but was “automatically activated” because the decision period had expired.
Cryptocurrency journalist Eleanor Terrett clarified these claims, stating that this was a misinterpretation. According to Terrett, Teucrium's XRP ETF falls under Section 40 (Investment Company Act of 1940) because it is structured around Treasury bonds, cash, and derivative receivables. These types of ETFs don't require an active SEC approval process; the product automatically becomes active once the application period is over.
Terrett also noted that futures-based ETFs generally go through the same process, but spot crypto ETFs are completely different. Because spot ETFs are registered as “commodity trusts” under Section 33 of the Securities Act of 1933, they require explicit SEC approval to trade.
Therefore, spot crypto ETFs like LTC, SOL, or XRP cannot be automatically approved or begin trading while the government shutdown continues. The SEC must resume full operations and review S-1 filings.
*This is not investment advice.