Canary Capital has filed with the U.S. Securities and Exchange Commission (SEC) to launch a spot XRP exchange-traded fund (ETF). If approved, the crypto investment firm will allow investors to gain exposure to XRP without directly purchasing the asset.
The outlook for an XRP ETF continues to grow, while hopes for similar financial products on Solana are fading.
Canary Capital Files for XRP Spot ETF
According to the filing, the fund will track the value of XRP using the CF Ripple-Dollar Reference Rate from the CME exchange. This is the daily benchmark index price for Ripple, aggregating trade data from multiple Ripple-USD markets operated by major cryptocurrency exchanges. Specifically, these exchanges comply with the strict regulatory requirements of the CF Benchmarks.
Canary Capital's proposed financial product will allow institutional and individual investors to gain exposure to XRP through the traditional finance (TradFi) market, while reducing the technical challenges of custody, security, and regulation. The company's interest in an XRP ETF stems from seeing potential in the cryptocurrency market beyond Bitcoin and Ethereum.
"We are seeing signs of a more progressive regulatory environment and increasing investor sophistication in seeking exposure to cryptocurrencies beyond Bitcoin and Ethereum, particularly for enterprise-grade blockchain solutions like XRP and their native tokens," said a Canary spokesperson.
Read more: XRP ETF Guide: What Is It and How Does It Work
Canary Capital is not alone in this vision. As reported by BeInCrypto, crypto asset manager Bitwise has also recently filed for an XRP ETF. The publicly available filing lists CSC Delaware Trust Company as the registered agent, which will provide legal and corporate compliance services.
Similarly, crypto asset manager Grayscale has recently launched an XRP Trust. As interest in XRP ETFs grows, the Ripple community is becoming increasingly excited about the prospect of XRP price appreciation. This can be seen through the recent surge in the weighted sentiment indicator for XRP, which indicates an increase in positive comments, posts, or messages about XRP found on social media and the internet.
However, the path for an XRP ETF is not an easy one. The issue of whether XRP is a security or not has not been fully resolved. The SEC has recently appealed the ruling that XRP is not a security, following Judge Analisa Torres' decision that XRP is only a security when sold to institutional investors.
Unlike the cases of Bitcoin and Ethereum spot ETFs, the lack of a futures market that could be used as a basis for approval of a spot ETF is a significant hurdle.
"To get a spot XRP ETF, you first need a futures ETF. Part of the approval of the BTC spot ETF was the SEC concluding the CME Bitcoin futures market provided sufficient surveillance to prevent fraud and manipulation. Getting a futures ETF for XRP would help pave the way for a spot ETF someday," wrote Fox Business correspondent Eleanor Terrett on Twitter.
However, some experts believe XRP is not in a position to become the third cryptocurrency ETF in the U.S. Solana was once considered a strong contender, but recent developments have significantly reduced its chances in the U.S. market. Several analysts now estimate the likelihood of approval by 2024 is almost non-existent. Meanwhile, other international markets are forging ahead with cryptocurrency ETF offerings, outpacing U.S. regulators in this space.
Read more: How to Buy XRP and Everything You Need to Know
According to BeInCrypto's data, XRP is currently trading at $0.53, with a slight increase of 0.75% over the past 24 hours.
