XRP ETF Nears Launch Amid Regulatory Roadblocks

By: Isha Das

The momentum towards the launch of the first U.S.-based exchange-traded fund (ETF) to hold XRP directly is building steam, as Canary Capital inches closer to getting its XRP ETF off the ground. Canary Capital made a significant move by filing a crucial document, Form 8A, with the U.S. Securities and Exchange Commission (SEC). This filing is typically essential for securities to be offered on an exchange, and it is anticipated to set the stage for Canary's XRP ETF to potentially begin trading as soon as this week.

However, despite the buzz surrounding the anticipated launch, several operational steps and critical regulatory approvals remain unsettled. These largely revolve around the SEC's registration statement requirements, known as an S-1. For the XRP ETF to move forward, the S-1 must be declared effective, setting parameters around risk disclosures, fees, and custody arrangements. Once effective, the listing exchange will typically issue a public notice, detailing the ETF's ticker and initial listing date. Without these essential steps, the path to trading remains indirect and clouded with uncertainty.

Adding another layer of complexity to the launch logistics is the role played by the Depository Trust & Clearing Corporation (DTCC). While the presence of an XRP ETF on DTCC lists indicates readiness within the infrastructure to support trading and settlement, it does not imply SEC approval nor guarantee the ETF's market arrival. Market participants should regard these operational records as a part of preparatory measures rather than substantive approvals.

As stakeholders anticipate the potential launch, there is a parallel focus on the broader implications of the SEC's recent approvals of generic listing standards for commodity-based trust shares. These standards streamline certain processes but maintain restrictions for more complex financial products, such as those involving leverage or derivatives. As a result, market actors, including investors and analysts, remain vigilant, verifying issuers' steps through public records and listings to determine a clear path forward for these much-awaited crypto investment products.