Asset Management Firm Bitwise Registers XRP ETF Trust in Delaware

Highlights:

• Bitwise has established a Delaware trust as a preliminary step toward launching an XRP ETF.
• The approval process for XRP ETF could be lengthy as the SEC evaluates the application.
• If approved, the ETF would further increase the use of XRP in traditional markets.

Bitwise, the leading crypto index fund manager, has taken a step toward launching a spot exchange-traded fund (ETF) for Ripple (XRP). On Sept. 30, the firm registered a trust entity, Bitwise XRP ETF, in Delaware, which appeared on the state’s Division of Corporations website. 

Registering a trust entity is the initial step toward filing to list and trade ETF shares. Companies like BlackRock, Bitwise, and Fidelity all established trust entities for Bitcoin (BTC) and Ethereum’s ether (ETH) before submitting their ETF applications for those tokens.

The registered agent for the filing was CSC Delaware Trust Company, offering compliance services for corporate and legal matters. The agent’s website states that Delaware is favored for corporate filings due to its business-friendly tax policies and regulations. Notably, BlackRock filed its Ethereum ETF in Delaware less than a year ago. This choice indicates Bitwise is making a serious effort despite the challenges of securing regulatory approval.

🚨SCOOP: Crypto asset manager @BitwiseInvest has filed in the state of Delaware for an $XRP ETF.

More details to come. Stay tuned. 😁 pic.twitter.com/2q7zDj7aYm

— Eleanor Terrett (@EleanorTerrett) October 1, 2024

However, this Delaware application does not guarantee that a formal registration with the Securities and Exchange Commission (SEC) will occur soon. It could be part of the preliminary preparations, and the actual filing may take several more months.

Moreover, no official filing has been submitted to the SEC’s EDGAR database so far, where ETF proposals are typically filed. However, a Bitwise spokesperson has confirmed the authenticity of the XRP ETF application. 

*BITWISE XRP ETF FILING IS GENUINE, SPOKESPERSON CONFIRMS

Source: DB | Coins: XRP

— db (@tier10k) October 1, 2024

Ongoing Ripple-SEC Legal Battle May Influence SEC’s Decision on XRP

Approval is not guaranteed, and it is uncertain how long the Securities and Exchange Commission will take to make a decision. Last month, Grayscale launched an XRP fund aimed at both individual and institutional accredited investors.

Rayhaneh Sharif-Askary, Grayscale’s Head of Product & Research, says, “We believe Grayscale XRP Trust gives investors exposure to a protocol with an important real-world use case.”

The ongoing legal battle between Ripple and the SEC adds complexity to the situation. Although Ripple achieved a partial victory, U.S. District Judge Analisa Torres determined that some of Ripple’s token sales violated securities laws, resulting in a $125 million fine. The effect of this ruling on Bitwise’s potential XRP ETF remains unclear, but it may also influence the SEC’s decision.

Ripple’s CEO, Brad Garlinghouse, previously indicated that an XRP ETF could enter the market. In an interview, he referred to it as “inevitable” following the successful launch of Bitcoin and Ethereum ETFs in the United States. In January, the SEC approved multiple spot Bitcoin ETFs, including those from BlackRock, Grayscale, and Fidelity. Subsequently, the agency also greenlit eight Ethereum ETFs.

Ripple CEO Brad Garlinghouse says he would "certainly welcome" an XRP ETF https://t.co/qjdDlgRGof pic.twitter.com/5qob31M65M

— Bloomberg TV (@BloombergTV) February 20, 2024

The approval of an XRP ETF would enable institutional investors to access cryptocurrency through a regulated investment vehicle, potentially enhancing liquidity and driving token adoption. In recent months, rumors have emerged about an XRP ETF launch. 

In November 2023, XRP’s price surged by 12% following a fake filing for a “BlackRock iShares XRP Trust” in Delaware, fueling speculation about a possible XRP ETF. BlackRock later denied the application, and Delaware prosecutors are currently investigating the fraudulent filing.

XRP Declines Over 3% Despite Recent Positive Developments

In a volatile twist, XRP, the native cryptocurrency of Ripple, has faced a decline despite recent positive developments. At the time of writing, XRP has dropped over 3.33% to trade around $0.60, highlighting the inherent unpredictability of the cryptocurrency market.