In a significant move for cryptocurrency investment options, 21Shares has added its name to the growing roster of firms petitioning the U.S. Securities and Exchange Commission (SEC) for a spot XRP exchange-traded fund (ETF). On November 1, 21Shares filed an S-1 registration form for its Core XRP Trust shares, aiming for a listing on the Cboe BZX Exchange. Coinbase, reckoned as the leading cryptocurrency exchange in the nation, is set to act as the custodian for this fund. This initiative comes on the heels of 21Shares’ successful launches of spot Bitcoin and Ethereum ETFs earlier in the year, demonstrating the company’s expanding influence in the digital asset space.
Understanding the Core XRP Trust
The Core XRP Trust is designed as a passive investment vehicle that seeks to track the market price of XRP accurately. Unlike traditional funds that may actively manage assets to seek additional gains, the Trust’s strategy is fundamentally different. It will not engage in leverage, derivatives, or any related strategies; instead, it will aim to reflect the performance of the CME CF Ripple-Dollar Reference Rate. This benchmark is calculated by CF Benchmarks Ltd. and takes various expenses into account, ensuring transparency and reliability in its performance tracking.
It’s vital to clarify that although investors will have access to the Trust’s shares through standard brokerage accounts, they will not be directly investing in XRP. This design can be particularly appealing to those who wish to minimize the risks connected with holding or transferring XRP actively or navigating the complexities of spots XRP exchanges.
While the news of 21Shares’ filing is encouraging for proponents of XRPs as an investment vehicle, the likelihood of SEC approval remains precarious. The SEC has historically hesitated to approve any spot XRP ETFs, primarily due to its ongoing legal dispute with Ripple Labs, which launched in 2020. The SEC has alleged that Ripple raised a staggering $1.3 billion through unregistered XRP sales, a serious accusation that cast a shadow over the cryptocurrency’s legitimacy.
A notable twist occurred in 2023 when a court ruling determined that XRP was not classified as a security when traded on exchanges, though the larger legal battle continues in appeals court. Ripple CEO Brad Garlinghouse has voiced optimism about eventual SEC approval for a spot XRP ETF, reflecting a perspective shared by many in the investment community. The recent approvals for Bitcoin and Ethereum ETFs can be seen as promising precedents.
Beyond 21Shares, other financial entities such as Canary Capital and Bitwise are also vying for approval of their spot XRP ETFs. This burgeoning interest from institutional investors reflects a significant demand for diverse cryptocurrency investment vehicles, even amid the regulatory uncertainties clouding the digital asset sector. As firms continue to flesh out their ETF proposals, the landscape of cryptocurrency investment remains dynamic, with evolving regulations potentially paving the way for more accessible investment options.
21Shares’ application for a spot XRP ETF signifies a pivotal movement in the cryptocurrency sphere, illustrating the intricate balance between ambition and the pressing challenges posed by regulatory environments. As this scenario unfolds, stakeholders will be closely monitoring how both market dynamics and legal outcomes will shape the future of XRP investments.
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