Canary Capital is filing a Ripple (XRP) exchange-traded fund (ETF) with the Securities and Exchange Commission (SEC). Bitwise has filed for a similar ETF with S-1, and this follows. The filing indicates growing institutional interest in cryptocurrency assets beyond Bitcoin and Ethereum.
The CME CF Ripple dollar reference rate will be used as a daily benchmark for XRP’s value, and the proposed Canary XRP ETF hopes to track its value. It includes data on XRP trading from major crypto exchanges, enabling a total view of XRP’s performance.
Canary Capital spokesperson said they see the trend away from a more progressive regulatory past. Interest in XRP as an enterprise-grade blockchain solution comes from this environment and increased investor demand. In the case of this ETF, the firm believes its investors will have sophisticated access to the cryptocurrency market.
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Ripple Faces SEC Scrutiny Over XRP Sales
The SEC has 30 days to comment on the application after the filing. The agency has another 240 days for a final decision. The SEC’s review usually involves going through the initial 45 days before additional time may be granted if the SEC requests more information.
If the SEC adheres to its typical timeline, a final ruling on the ETF could occur by June 2025. The ongoing lawsuit against Ripple Labs, though, is the agency’s decision to consider. The focus of this lawsuit is that XRP sales are securities violations, causing issues in approving an ETF.
Since December 2020, Ripple has been under the SEC’s radar regarding its XRP sales. The SEC says these sales violate securities laws, knocking Ripple’s chances of getting ETF approval. However, the lawsuit’s outcome isn’t straightforward and directly tied to the running of the XRP ETF.
Ripple Optimistic Despite SEC’s Ongoing Appeal
In July 2023, a judge ruled that sales of XRP to retail customers do not violate the securities laws. This ruling comforted XRP holders, as they were otherwise fearing regulatory consequences. However, the legal battle remains unresolved thanks to the SEC’s appeal of this decision.
Ripple executives remain optimistic that the SEC will eventually reach a settlement. But they fear the agency risks losing in court by staying with the case. That could be good news for regulators, who may finally receive clearer guidance for XRP.
It has recently revamped its approach to crypto asset securities, and as part of an amended complaint in the Binance lawsuit, the SEC even conceded it miscommunicated previously. However, the agency regretted using the term ‘crypto asset securities,’ which may have confused the industry.
XRP May Follow Ether’s Path to Approval
However, the Canary ETF will undoubtedly influence the SEC’s future decisions on crypto. Investors are eager for clarity around XRP’s regulatory fate and whether or not the ETF will be approved. If approved, the ETF would make it easier for institutional and retail investors to buy XRP.
A hopeful precedent for XRP has arisen from Ether’s recent approval for spot ETFs. Once the SEC investigated potentially violated rules on Ether, it recognized Ethereum as a non-security. It also reflects the possibility for XRP to undergo a similar approval.
