The U.S. Securities and Exchange Commission (SEC) has approved the launch of three XRP futures-based exchange-traded funds (ETFs) by ProShares Trust on April 30, an SEC filing shows. On Jan. 17, days before the now crypto-friendly President Donald Trump was inaugurated, ProShares had proposed the following ETFs:
- Ultra XRP ETF, which will provide 2x leverage
- Short XRP ETF, which will provide inverse (-1x) leverage
- Ultra Short XRP ETF, which will provide inverse (-2x) leverage
These will be the second, third, and fourth XRP-related ETFs to be launched in the U.S. On April 8, the first XRP futures ETF by Teucrium started trading at the New York Stock Exchange (NYSE) and saw a “terrific response.”
It is important to note, however, that a futures-based ETF provides exposure to the price movements of XRP futures contracts. In other words, ProShares’ ETFs will track the price of XRP through the XRP Index. This means that, unlike a spot ETF, which would require buying XRP tokens, a futures XRP ETF allows placing bets on XRP’s price without holding the token itself.
ProShares’ separate application for spot XRP ETFs is still pending with the SEC. However, while the U.S. dithers, the first spot XRP ETF by Hashdex started trading in Brazil earlier this week.
It does not, however, discount the importance of the launch of these XRP futures ETFs. These products will offer a regulated way to profit from the price movement of XRP, opening the doors for institutional interest.
Impact on XRP price
The futures-ETF approval had a positive impact on the price of XRP, which rose by 3.5% over the past 24 hours to $2.27 at the time of writing, CryptoSlate data shows. The market cap of XRP now stands at over $312 billion.
It is interesting to note that the price of all the other tokens with the biggest market caps, except Bitcoin (which grew by 0.11%), has declined over the past 24 hours. This indicates that the XRP price has moved against the market, experiencing the largest spike in price among the top 10 tokens.
Ripple’s difficult relationship with the SEC has improved
The launch of XRP-related ETFs in the U.S. would be considered a big win for Ripple, the company behind XRP. Ripple was in hot water with the SEC for years. However, that has changed since Trump took over and his nominee, Paul Atkins, became SEC chairman.
Trump, who adopted a crypto-friendly stance for his second term, and Atkins, a crypto advocate and former SEC commissioner, have taken a widely different approach than their predecessors. Speaking at a roundtable held by the SEC’s Crypto Task Force on Friday, Atkins said:
“The market itself seems to indicate that the current framework badly needs attention.”
Atkins added that crypto innovation “has been stifled for the last several years” because of the SEC’s approach under former chair Gary Gensler.
In 2020, the SEC sued Ripple, alleging that it violated securities laws by selling XRP, which the agency considered to be an unregistered security.
In July 2023, Ripple secured a partial victory when the judge decided that XRP does not qualify as a security when sold on secondary markets like exchanges. However, institutional sales of XRP constituted unregistered securities—the judge levied a fine of $125 million, but the SEC appealed the decision.
On March 19, Ripple CEO Brad Garlinghouse announced that the SEC has agreed to drop the appeal, subject to Commission vote and approval. Garlinghouse declared that the landmark “case has ended. It’s over,” calling the moment a “historic victory.”
On April 10, Ripple and the SEC jointly filed a motion to pause the proceedings of the lawsuit to discuss settlement terms.
The Ripple SEC lawsuit resolution will have broader implications on the crypto market as it would set a precedent to prove tokens traded on exchanges are not necessarily securities.
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Source: https://cryptoslate.com/u-s-sec-greenlights-proshares-xrp-futures-etfs-for-april-30-launch/