Let G be a split reductive group over a local field K, and let G((t)) be the corresponding loop group. In [1], we have introduced the notion of a representation of (the group of K-points) of G((t)) on a pro-vector space. In addition, we have defined an induction procedure, which produced G((t))-representations from usual smooth representations of G. We have conjectured that the induction of a cuspidal irreducible representation of G is irreducible. In this paper, we prove this conjecture for G=SL2.