- Cboe Exchange filed applications for four spot XRP ETFs from major asset managers WisdomTree, Bitwise, 21Shares, and Canary.
- XRP has experienced a 25% decline over two weeks despite increased institutional interest.
- The applications heavily reference the July 2023 partial victory in SEC v. Ripple Labs case for regulatory clarity.
- Unlike Bitcoin and Ethereum ETFs, XRP lacks an established CME futures market, a previous SEC requirement.
- Asset managers are implementing protective measures, including sourcing XRP from secondary markets rather than directly from Ripple Labs.
The Chicago Board Options Exchange (Cboe) has submitted four separate applications to the Securities and Exchange Commission (SEC) for spot XRP exchange-traded funds, marking a significant expansion in cryptocurrency investment products. The applications come from established asset managers WisdomTree, Bitwise, 21Shares, and Canary.
The timing of these applications follows the successful launches of Bitcoin and Ethereum ETFs, though market sentiment remains mixed. XRP’s value has declined 25% in the past two weeks, despite approaching its historical peak of $3.40 in January.
The regulatory landscape for XRP remains complex. The applications heavily rely on the July 2023 court decision in the SEC v. Ripple Labs case, where the court ruled that programmatic sales of XRP to retail investors did not constitute investment contracts. Cboe states in its filings that it “believes it is applying proper legal standards in making a good faith determination that XRP is not under these circumstances a security under federal law.”
A critical distinction from previous crypto ETF approvals is XRP’s lack of an established CME futures market, which the SEC had previously considered a crucial requirement for Bitcoin and Ethereum ETF approvals.
To address potential regulatory concerns, asset managers are implementing robust protective measures. These include:
– Sourcing XRP exclusively from secondary markets
– Enhanced surveillance and market monitoring
– Licensed third-party custodians
– Cold storage security protocols
– Mechanisms for halting intraday trading
The SEC’s review process will take 45 days once published in the Federal Register, with possible extensions up to 90 days. This timeline coincides with the regulator’s ongoing appeal of the Ripple ruling to the Second Circuit, where it seeks to reverse the previous classification of XRP.
The applications follow Cboe’s recent submission of four Solana ETF applications, which were resubmitted after addressing previous SEC concerns regarding market integrity and investor protections.
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