Bitwise, an asset manager, recently submitted a filing for an XRP exchange-traded fund (ETF) to Delaware’s Division of Corporations on September 30. This filing includes the registration for establishing a Delaware statutory trust, a business-oriented trust legally recognized in the state. Similar to Bitcoin and Ethereum, companies like Bitwise, BlackRock, and Fidelity first registered trust entities for XRP before filing to list and trade ETF shares based on the cryptocurrency. Registering a trust entity is the initial step toward filing for an ETF listing and trading.
Grayscale, a digital currency asset manager, revealed plans to launch an XRP Trust investment product last month, with the potential to convert it into an XRP ETF in the future. In 2021, Grayscale had to shut down its previous trust following the SEC’s lawsuit against Ripple Labs, accusing them of selling XRP as an unregistered security. However, the legal dispute between Ripple and the SEC ended earlier this year with Ripple settling for $200 million. This resolution cleared the way for US exchanges to relist XRP and allowed companies like Grayscale to develop new XRP-related investment products.
Despite the resolution of XRP’s regulatory status, the regulatory landscape for cryptocurrencies remains unpredictable. For an XRP ETF to become a reality, it would need to comply with SEC regulations, which have shown a cautious approach towards crypto ETFs, especially considering previous disputes over XRP’s classification as a security with Ripple. XRP faced a 2.7% drop to $0.60 on Wednesday amid a wider slump in the cryptocurrency market due to escalating tensions between Iran and Israel.
Ripple CEO Brad Garlinghouse has championed the potential for an XRP ETF, voicing his support in February. He emphasized that investors would appreciate this financial instrument for the diversification it offers. Garlinghouse compared the potential XRP ETF to the early days of the stock market when investors sought to diversify risk by investing in multiple stocks or companies. He suggested that the introduction of an XRP ETF aligns with the trend of offering diversification options to investors in the cryptocurrency market.
The filing for an XRP ETF by Bitwise represents a significant step towards introducing an ETF based on the cryptocurrency, following the settlement of regulatory issues between Ripple and the SEC. Companies like Bitwise, BlackRock, and Fidelity have paved the way for XRP ETFs by registering trust entities for various cryptocurrencies. The potential launch of an XRP ETF could provide investors with another avenue to gain exposure to XRP and diversify their investment portfolios in the cryptocurrency market.
Overall, the submission of the filing for an XRP ETF and the involvement of major players like Bitwise and Grayscale signal growing interest in expanding the range of investment products in the cryptocurrency sector. While regulatory uncertainties remain a challenge, the resolution of legal disputes and the endorsement of XRP ETFs by industry leaders like Brad Garlinghouse indicate potential opportunities for further innovation and development in the cryptocurrency market.
