Key Takeaways
- Bitwise has filed with the SEC to create a spot XRP ETF, offering direct exposure to Ripple Labs' XRP token.
- The ETF's approval may depend on the SEC's potential appeal of a 2023 court ruling that classified XRP trades as non-securities transactions.
- Bitwise highlighted risks, including future regulatory reclassification of XRP as a security, which could impact the ETF.
Crypto asset manager Bitwise filed an S-1 registration statement with the Securities and Exchange Commission (SEC) to launch a spot XRP exchange-traded fund (ETF). This ETF would provide investors with direct access to XRP, the native token of Ripple Labs.
In its filing, Bitwise asserted that XRP is not a security—contrasting with past SEC claims—and underscored XRP’s operation on a decentralized ledger, which enhances transparency and security. BNY Mellon will act as the trust’s administrator, while Coinbase Custody will serve as the custodian.
SEC’s Pending Decision on XRP Classification
The filing coincides with the SEC’s ongoing legal battle with Ripple over whether XRP qualifies as an unregistered security. The SEC has until October 7, 2024, to appeal a 2023 court ruling that excluded secondary XRP sales from securities regulations.
Alex Thorn, Galaxy Digital’s head of research, suggested that an SEC appeal is likely. If successful, it could derail Bitwise’s ETF proposal. Bitwise acknowledged this risk, noting that a court ruling classifying XRP as a security might force the trust’s liquidation.
Beyond this XRP ETF filing, Bitwise has already introduced spot Bitcoin and Ether ETFs in the U.S.
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FAQs
1. What is a spot XRP ETF?
A spot XRP ETF would track the live price of XRP, allowing investors to gain exposure without holding the token directly.
2. Why does the SEC’s appeal matter?
If the SEC successfully appeals the 2023 ruling, XRP could be reclassified as a security, jeopardizing the ETF’s approval.
3. Who manages Bitwise’s proposed ETF?
BNY Mellon handles administration, while Coinbase Custody safeguards the assets.