Canary Capital Initiates XRP ETF Application Amid Regulatory Uncertainty
Canary Capital has filed an S-1 form with the SEC to launch an XRP-linked ETF, following a similar application by Bitwise. The ETF aims to provide traditional market access to XRP, which is currently facing regulatory challenges due to ongoing litigation with the SEC. Significant hurdles remain for potential approval as regulatory clarity is sought.
Canary Capital has made significant strides toward the establishment of an exchange-traded fund (ETF) linked to the cryptocurrency XRP, associated with Ripple. This filing marks the second application of its kind in the United States, closely succeeding Bitwise’s similar initiative to offer a spot XRP ETF just one week prior. On Tuesday, Canary Capital submitted an S-1 form to the U.S. Securities and Exchange Commission (SEC), an essential prerequisite for companies aiming to issue new securities and become listed on a public stock exchange. The proposed ETF, managed by Canary Capital Group, is designed to track the price of XRP through the CME CF Ripple index. If the SEC grants approval, the ETF would allow investors to access XRP through conventional brokerage accounts, thereby circumventing the difficulties and risks typically associated with directly purchasing and holding XRP. Currently, XRP is ranked seventh among cryptocurrencies according to CoinGecko data, while its major competitors, Bitcoin (BTC) and Ether (ETH), have already been introduced to investors as ETFs, accumulating significant inflows since earlier this year. This application emerges in the aftermath of a federal ruling in August that mandated Ripple Labs to compensate the SEC $125 million for engaging in unregistered institutional sales of XRP. In a statement, Steven McClurg, founder of Canary Capital, noted, “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 initiative follows Bitwise’s submissions, both of which signify a vigorous effort to integrate XRP into traditional financial markets via regulated ETF products. However, the approval of a spot XRP ETF remains uncertain. The SEC has yet to endorse such a product, and Ripple is currently embroiled in a multi-year litigation with the SEC regarding the characterization of XRP as an unregistered security, a subject that casts a shadow over the ETF prospects. Following the SEC’s appeal against a prior court ruling favorable to Ripple concerning XRP’s classification, many industry observers speculate that regulatory clarity may be delayed until 2025 or beyond. Meanwhile, as crypto firms like Crypto.com engage in counter-suits against the SEC, skepticism prevails regarding the potential approval of additional crypto ETFs under the current leadership of SEC Chairman Gary Gensler.
The recent movement towards establishing an XRP ETF by Canary Capital is grounded in the ongoing legal and regulatory challenges involving Ripple and the SEC. Ripple Labs has faced allegations from the SEC regarding the sale of XRP being an unregistered securities offering. This controversy has complicated the regulatory landscape for cryptocurrency products, including ETFs, creating barriers to entry for potential investment vehicles linked to XRP, despite demand from investors for more sophisticated access to cryptocurrency markets. The success of Bitcoin and Ether ETFs has heightened interest in a similar product for XRP, but the regulatory environment remains fraught with uncertainty.
The filing by Canary Capital for an XRP-linked ETF represents a significant momentum within the cryptocurrency market as it seeks to integrate into traditional financial avenues. While challenges persist due to the ongoing legal issues between Ripple and the SEC, the move indicates a growing demand among investors for diversified access to cryptocurrencies. The regulatory approval process still looms as a significant hurdle, and industry insiders remain cautious about the timeline for potential approval of XRP ETFs.
Original Source: zycrypto.com
Post Comment