Canary Capital Files for Spot XRP ETF with the SEC

Highlights:

• Canary Capital filed for a spot XRP ETF, enhancing investor access via brokerage accounts.
• This filing follows Bitwise’s recent application, pushing XRP into traditional financial markets.
• SEC’s ongoing dispute with Ripple may complicate XRP ETF approval.

On October 8, Crypto investment firm Canary Capital officially filed an S-1 (registration statement) for a spot XRP exchange-traded fund (ETF) with the US Securities and Exchange Commission (SEC). According to the company, ETF would provide investors access to the XRP market through a traditional brokerage account, eliminating potential barriers to entry and risks involved with acquiring and holding XRP directly.

After Bitwise filed an S-1 registration statement for an XRP ETF last week, crypto investment firm Canary Capital also filed a registration statement for a spot XRP ETF with the U.S. SEC, becoming the second company to pursue the product this month. https://t.co/QcPKi3Vivz

— Wu Blockchain (@WuBlockchain) October 9, 2024

This filing comes after Bitwise filed for its own spot XRP ETF just a week earlier. Like Canary’s, Bitwise’s filing represents a significant effort to introduce XRP into traditional financial markets through ETF products.

Canary stated that its XRP ETF would track the price of XRP using the Chicago Mercantile Exchange (CME) CF Ripple index — a real-time price benchmark product. The fund will not use any derivatives products to track the value of XRP, as this could expose their product to “additional counterparty and credit risks.” Canary Capital did not disclose who the custodian for the XRP ETF is or what ticker the fund will use for listing.

Growing Demand for XRP ETFs Signals Progressive Regulatory Shift

Steven McClurg, the founder of Canary and a former co-founder of Valkyrie Funds, stated: 

“We’re seeing encouraging signs of a more progressive regulatory environment coupled with growing demand from investors for sophisticated access to cryptocurrencies beyond Bitcoin and Ethereum–specifically investors seeking access to enterprise-grade blockchain solutions and their native tokens such as XRP.”

Canary Capital’s decision to file for an XRP ETF follows just seven days after crypto asset manager Bitwise submitted its application for an XRP fund with the SEC on Oct. 2. If the SEC approves the applications from either Canary Capital or Bitwise, it would mark the first approval of a spot XRP fund by the regulator.

According to Fox Business, Bitwise has filed the first S-1 application for an XRP ETF, becoming the first company to apply for an XRP-based spot ETF. The application was submitted to the U.S. SEC on Wednesday morning. Bitwise CEO Hunter Horsley said XRP is one of the most… https://t.co/BZ9EyX1N1o

— Wu Blockchain (@WuBlockchain) October 2, 2024

Challenges for XRP ETF Approval Amid Ongoing SEC Dispute with Ripple Labs

Gaining approval for the ETF could be challenging due to the SEC’s ongoing dispute with Ripple Labs over whether XRP qualifies as an unregistered security. Unlike Bitcoin and Ethereum, miners did not gradually mine XRP. When the XRP Ledger launched in 2012, it created 100 billion tokens at once. Ripple retained 20 billion tokens, while the remaining 80 billion were intended to support the ecosystem.

In July 2023, Judge Analisa Torres’s August ruling determined that XRP sales on secondary markets to retail investors do not constitute securities transactions. Although Ripple was fined $125 million for earlier violations—a notable decrease from the SEC’s original demand of $2 billion—the appeal resulted in a drop in XRP’s price.

Last week, the SEC appealed a court ruling regarding Ripple Labs and XRP’s classification. This appeal has stalled progress on an XRP ETF, with ongoing regulatory uncertainty potentially delaying approval until 2025 or later.

#XRPCommunity #SECGov v. #Ripple #XRP BREAKING: The @SECGov has filed a Notice of Appeal of Judge Torres’s Ruling. pic.twitter.com/j8bLIZQ5LT

— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) October 2, 2024

The recent XRP ETF filings follow the securities regulator’s approval of spot ETFs for two of the largest cryptocurrencies by market capitalization—Bitcoin and Ethereum—this year. Since launch, spot Bitcoin ETF products have drawn nearly $19 billion, while Ether ETFs have seen outflows totaling $550 million.