WisdomTree Eyes XRP ETF as Ripple Coin Hits New Highs

By: Isha Das

In a promising development for the crypto industry, asset manager WisdomTree has initiated the first steps towards launching an exchange-traded fund (ETF) focused on XRP, filing for a trust entity in Delaware. This move, if successful, would allow the ETF to track the price of XRP, a digital asset developed by Ripple Labs. The filing represents a significant shift in the market as it offers institutional investors expanded access to digital assets, signaling heightened optimism in the financial sector.

XRP has responded to these developments with a notable upswing, experiencing a nearly 7% increase in the past 24 hours and reaching $1.47. This price hike reflects XRP's strong performance among the top 10 cryptocurrencies by market capitalization, maintaining most of its recent gains despite broader market fluctuations. However, XRP's pathway to becoming an ETF-backed asset is fraught with regulatory and legal challenges.

Ripple Labs has been engaged in a legal battle with the United States Securities and Exchange Commission (SEC), which has accused the company of selling XRP as an unregistered security. Although Ripple achieved a partial legal victory in 2023, confirming that retail sales of XRP did not breach securities laws, the ongoing SEC appeal continues to cloud the asset's future regulatory standing. The recent resignation of SEC chair Gary Gensler following a political shift has sparked hope for a more favorable regulatory environment under the new administration.

In its ambitious endeavor, WisdomTree joins a growing list of firms such as Bitwise and Canary Capital pursuing XRP ETFs as the market evolves. The prevailing sentiment among analysts is that these moves highlight a strategic push to align with increasing institutional demand amidst a backdrop of regulatory uncertainty. The approval of these products would mark a significant milestone, offering institutional investors an innovative avenue to engage with the burgeoning digital asset sector.

As the crypto landscape becomes increasingly mainstream, ETFs emerge as a crucial link for institutional investors seeking exposure to digital assets. Earlier this year, the introduction of Bitcoin ETFs marked a pivotal moment, showcasing substantial capital inflows and reinforcing the appeal of such investments. Nevertheless, Ripple’s legal challenges must be resolved to pave the way for regulatory clearance of XRP ETFs. Until then, the market remains vigilant, navigating the complexities of a regulatory environment in flux, with firms like WisdomTree poised for future opportunities.