21Shares Joins Peers in Applying for Spot XRP ETF as SEC Scrutiny Continues

• The latest development in the crypto market comes as asset manager 21Shares seeks approval for a spot XRP ETF, joining other firms aiming to capitalize on this burgeoning sector.

• This strategic move highlights the interest among asset managers in securing exposure to XRP, particularly in the wake of recent SEC decisions favoring spot Bitcoin and Ether ETFs.

• In the official filing, 21Shares indicated, “The trust does not provide investors with direct exposure to XRP but offers an opportunity to indirectly access the market,” emphasizing the innovative approach in their investment vehicle.

21Shares has filed for a spot XRP ETF with the SEC, amid growing interest in cryptocurrency investment vehicles following recent approvals.

21Shares Files for Spot XRP ETF amid Rising Interest

In a significant move signaling growing institutional interest, 21Shares has formally submitted a filing to the U.S. Securities and Exchange Commission (SEC) for its Core XRP Trust. If approved, this spot XRP ETF will allow investors to trade shares on the Cboe BZX Exchange. Unlike direct exposure to cryptocurrencies, 21Shares’ product aims to provide investors with indirect access to the XRP market, reflecting a trend in alternative investment structures designed to meet regulatory standards.

Context of the SEC and Previous ETF Approvals

This ETF application follows a series of strategic moves by other asset managers including Bitwise and Canary Capital, who have also sought similar opportunities for spot XRP ETFs. Notably, the SEC has recently approved spot Bitcoin and Ether ETFs earlier in 2024, indicating a potential shift in regulatory attitudes. However, the complete lack of response regarding applications for spot XRP ETFs amidst the ongoing legal battles with Ripple Labs illustrates the complexities still inherent in crypto regulation.

The Ripple Effect: Legal Context of XRP

The landscape for XRP is particularly complicated due to the SEC’s ongoing lawsuit against Ripple Labs. A federal court ruling concluded that XRP is not classified as a security concerning programmatic sales on exchanges, which is pivotal for future ETF discussions. Nevertheless, both the SEC and Ripple are engaging in appeals that may affect how these applications are evaluated going forward. The outcome of this lawsuit could set a precedent that will resonate across the entire cryptocurrency ecosystem.

Market Implications and Future Outlook

The initiation of spot XRP ETF applications represents a broader trend where asset managers are diversifying their portfolios with a variety of digital assets. Following the SEC’s approval of spot Bitcoin ETFs, firms are increasingly exploring options tied to alternative cryptocurrencies, including Solana and Litecoin. For instance, recent applications by VanEck and the plans from 21Shares and Canary Capital for spot Solana and Litecoin ETFs reflect a rapidly evolving market, with asset managers eager to adapt to this new investment landscape.

Potential Delays and Political Implications

While 21Shares and other firms await the SEC’s decision, the regulator may stretch the review process, leading to uncertainty in market execution timing. This could impact the potential introduction of new regulatory leadership if political shifts occur in upcoming elections. Speculation surrounding the potential replacements for current SEC Chair Gary Gensler, such as Kamala Harris or Donald Trump, adds another layer of complexity that could influence the regulatory approach to cryptocurrency ETFs.

Conclusion

In conclusion, 21Shares’ bid for a spot XRP ETF underscores the enthusiasm within the financial industry to expand cryptocurrency offerings to institutional investors. With the SEC’s recent activities around Bitcoin and Ether ETFs setting a new precedent, the outcome of the XRP ETF application remains a critical watchpoint for broader market implications. As developments unfold, both investors and the cryptocurrency market await clearer regulatory guidance that could herald the next wave of crypto investment opportunities.