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Crypto investment firm Canary Capital has officially entered the race to launch a spot XRP exchange-traded fund (ETF). It becomes the second company in just seven days to seek approval from the U.S. Securities and Exchange Commission (SEC).
In its filing on October 8, Canary Capital outlined its goal of creating an XRP ETF, aiming to provide investors with a seamless way to gain exposure to XRP without directly holding the cryptocurrency.
The firm stated that its proposed ETF would track the price of XRP using the Chicago Mercantile Exchange (CME) CF Ripple index. This index a real-time benchmark designed to reflect the current market value of XRP. Importantly, Canary Capital stated that the fund would avoid using derivatives to monitor XRP’s price. They argue that this reduces additional counterparty and credit risks often associated with such financial instruments.
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XRP ETFs Face Regulatory Hurdles
Canary Capital’s filing closely follows a similar application from crypto asset manager Bitwise, which submitted its own bid for an XRP ETF on October 2. If either company secures SEC approval, it would mark the first-ever spot XRP ETF, giving traditional investors an easier way to enter the XRP market through a brokerage account.
Despite the promising outlook, both applications face considerable regulatory challenges. The SEC is currently engaged in an ongoing lawsuit with Ripple, the issuer of XRP. The regulator alleges that XRP is an unregistered security and claims Ripple raised $1.3 billion through its sale.
This legal battle could serve as a significant roadblock for Canary Capital and Bitwise. This is because the SEC may be hesitant to approve any XRP-based products until the lawsuit is resolved.
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A Growing Demand for Crypto ETFs
At the time of writing, XRP is trading at $0.53, up slightly by 0.4% on the day. As more firms seek to create cryptocurrency-based ETFs, investors are also keeping an eye on the possibility of a spot Solana ETF.
By offering investors a way to access crypto without the complexities of buying and storing the token, the ETF could appeal to those looking for a more traditional approach to digital assets.
