21Shares Files for XRP ETF Amid Regulatory Challenges

By: Eliza Bennet

In a bold move that sees the continued interest in the cryptocurrency domain, asset management company 21Shares has filed for a spot XRP Exchange-Traded Fund (ETF) with the U.S. Securities and Exchange Commission (SEC). This filing, submitted on November 1st, seeks to list its Core XRP Trust shares on the Cboe BZX Exchange, with Coinbase, a major US crypto exchange, designated as the custodian of the fund. The initiative marks 21Shares' venture into expanding its ETF offerings, having already achieved success with Bitcoin and Ethereum ETFs earlier in the year.

The Core XRP Trust is described as a passive investment vehicle that aims to accurately track the price of XRP. It abstains from engaging in active trading strategies such as using leverage or derivatives. The primary metric used will be the CME CF Ripple-Dollar Reference Rate, which is expertly calculated by CF Benchmarks Ltd. This Trust is designed to minimize the usual risks associated with direct XRP investments by offering an indirect means of market participation through a traditional brokerage account.

However, the landscape for an XRP ETF approval remains uncertain. The SEC's pending legal proceedings with Ripple Labs over alleged unregistered XRP sales amounting to $1.3 billion pose significant regulatory obstacles. Although a 2023 court ruling declared XRP not to be a security when sold on exchanges, the case continues to be contested in the courts. Despite these hurdles, Ripple CEO Brad Garlinghouse has suggested that an eventual approval is feasible, largely drawing from the SEC's recent approval of Bitcoin and Ethereum ETFs.

The interest from institutional investors in XRP is further evidenced by other asset management firms, including Canary Capital and Bitwise, submitting their own applications for spot XRP ETFs. This burgeoning interest points to serious efforts to broaden access to XRP investment channels, even amidst prevailing legal challenges. The outcomes of these applications could potentially usher in a new era of XRP investments, providing more stability and security for investors looking to diversify their crypto portfolios.