21Shares Files SEC Spot XRP ETF Application

21Shares has filed a Form S-1 with the SEC, marking its intent to launch a spot XRP ETF, joining other firms in the growing interest for crypto ETFs amidst a complex regulatory environment.

21Shares Files for Spot XRP ETF

On November 1, 2024, asset manager 21Shares announced its filing of a Form S-1 with the U.S. Securities and Exchange Commission (SEC) to establish a spot XRP exchange-traded fund (ETF). This move positions 21Shares as the third firm to pursue an XRP ETF, following similar applications from Canary Capital and Bitwise in recent months. The product, named the 21Shares Core XRP Trust, aims to provide investors with an avenue for indirect exposure to XRP, the digital asset associated with Ripple Labs.

The filing specifies that the trust will not offer direct ownership of XRP but will enable investors to access the market for this cryptocurrency through shares traded on the Cboe BZX Exchange. If the application receives approval, the Coinbase Custody Trust Company is designated as the custodian for the XRP held in the trust, ensuring proper management and security of the digital assets.

Growing Interest in Crypto ETFs

The surge in interest surrounding cryptocurrency ETFs has been spurred by successful approvals of Bitcoin and Ethereum ETFs earlier in the year, leading to a broader appetite for alternative crypto investments. 21Shares’ filing reflects this growing demand, as investors increasingly seek ways to gain exposure to digital assets through regulated financial products. The strategic move to offer an XRP ETF highlights the evolving landscape of cryptocurrency investments, as well as the potential for mainstream acceptance within traditional financial markets.

Despite this interest, the road to approval for the XRP ETF remains uncertain due to the SEC’s heightened scrutiny of the crypto market, particularly in light of its ongoing legal proceedings against Ripple Labs. This lawsuit, which involves allegations of Ripple selling unregistered securities in the form of XRP, has critical implications for the classification of the asset and the entire ETF approval process.

Regulatory Challenges and Legal Implications

The SEC’s position on XRP, asserting that it meets the criteria of a security under the Howey Test, poses significant challenges for the approval of the XRP ETF applications currently under review. The Howey Test is a legal standard used to determine whether certain transactions qualify as investment contracts, and its application to XRP could shape regulatory perspectives on digital assets.

The complexity of the regulatory landscape is further exacerbated by Ripple’s ongoing legal battle with the SEC. In previous court rulings, Ripple achieved partial victories that may bolster its argument against the SEC’s assertions. For instance, a judge ruled that programmatic sales of XRP to retail investors did not qualify as securities transactions, while contracts for institutional sales were deemed unregistered securities. This mixed outcome highlights the legal intricacies that both Ripple and the SEC must navigate, and the potential impact on XRP’s future as an investment vehicle.

Political Landscape and its Impact on Crypto Regulation

The upcoming U.S. presidential election introduces another layer of complexity to the regulatory environment surrounding cryptocurrencies. Candidates Donald Trump and Kamala Harris have both indicated their intentions to reform the current regulatory framework for digital assets. These political signals suggest that changes may be on the horizon, potentially leading to clearer guidelines for crypto-based financial products.

If significant regulatory reforms are enacted as a result of the election, it could create a more conducive environment for the approval of cryptocurrency ETFs, including those for XRP. Enhanced clarity around regulations could also benefit other recently filed applications for cryptocurrencies such as Solana and Litecoin, further broadening the variety of investment products available in the crypto space.

Market Response and Future Prospects

Following the announcement of 21Shares’ ETF filing, XRP experienced a positive market reaction, trading at approximately $0.52, reflecting a more than 2% increase. This uptick underscores the sensitivity of cryptocurrency prices to news about regulatory developments and ETF approvals. The market’s response may be indicative of broader investor sentiment and interest in the potential for XRP to gain acceptance as a legitimate investment asset through regulated channels.

As the regulatory landscape continues to evolve and interest in crypto ETFs grows, the outcome of the SEC’s review of the XRP ETF applications will be closely monitored by investors and industry participants alike. The ongoing dialogue between regulatory bodies, crypto firms, and political leaders will play a crucial role in shaping the future of cryptocurrency investments in the United States.

In conclusion, the filing by 21Shares signals a significant moment in the cryptocurrency landscape, with potential implications for the market, regulatory environment, and investor access to digital assets. As the industry navigates through legal challenges and political shifts, the future of XRP and other cryptocurrencies remains a dynamic and evolving topic.

---

Disclaimer: All information provided on this website is for informational purposes only and should not be construed as financial or investment advice. We do not guarantee the accuracy, completeness, or timeliness of the information, and we are not responsible for any financial decisions you may make based on this information. Cryptocurrencies are highly volatile assets, and any investment in them carries a high level of risk.

*AI technology may have been used to develop this story and publish it as quickly as possible.