Bitwise, a leading crypto index fund manager, has filed for a spot XRP exchange-traded fund (ETF), aiming to provide investors with direct exposure to XRP. If approved by the U.S. Securities and Exchange Commission (SEC), this would mark a significant milestone, but challenges are expected along the way.
Bitwise’s Filing for a Spot XRP ETF
On Monday, Bitwise submitted a filing to Delaware’s Department of State’s Division of Corporations, naming the entity “Bitwise XRP ETF.” The CSC Delaware Trust Company is listed as the registered agent. Bitwise Chief Investment Officer Matthew Hougan confirmed the filing, stating, “We can confirm this is a registration by us. It is a registration of a trust entity in Delaware. More details and comments will be shared tomorrow.”
This ETF, if approved, would provide a new way for investors to gain exposure to XRP, but it faces regulatory hurdles as the SEC has not previously approved a spot XRP ETF.
SEC’s History with XRP and Crypto ETFs
The SEC has been entangled in a legal battle with Ripple, the company behind XRP, after accusing them of raising $1.3 billion through the sale of unregistered securities. This ongoing legal struggle makes it uncertain how a spot XRP ETF would fare with regulators.
While the SEC has not approved a spot XRP ETF, they have given the green light to other crypto products. In January, the SEC approved several spot Bitcoin ETFs, including offerings from BlackRock, Grayscale, and Fidelity. More recently, the agency also approved Ethereum ETFs, signaling some openness to crypto-related investment products.
Grayscale’s XRP Fund for Accredited Investors
Meanwhile, Grayscale, another prominent player in the crypto investment space, has announced its intention to launch an XRP “closed-end” fund for accredited investors. This fund will offer exposure to XRP, but it differs from an ETF in terms of investor accessibility and structure.
ETF vs. ETP: Understanding the Difference
The SEC often refers to these types of investment products as exchange-traded products (ETPs) rather than ETFs. Natasha Vij Greiner, the director of the SEC’s Division of Investment Management, emphasized this distinction during Georgetown University’s Financial Markets Quality Conference in September. She explained that spot Bitcoin ETPs, for instance, are not regulated under the Investment Company Act of 1940, meaning they lack certain protections and have different custody considerations.
Conclusion
The filing of a spot XRP ETF by Bitwise is a significant development in the evolving landscape of cryptocurrency investments. While regulatory approval remains uncertain, this move highlights the growing interest in providing more accessible crypto investment products for the broader market.
By keeping an eye on regulatory developments and the outcome of Ripple’s legal battle with the SEC, investors can better understand the future of XRP-based investment opportunities.
