- Canary Capital has submitted an application for a spot XRP ETF to the SEC.
- The ongoing appeal from the regulator in its case against Ripple could potentially delay the approval of this product and other similar proposals.
Canary XRP ETF
Following in the footsteps of Bitwise, Canary Capital Group LLC has become the second entity to apply for a spot XRP exchange-traded fund (ETF) in the United States. The digital asset investment firm submitted its Form S-1 to the US Securities and Exchange Commission (SEC) on Monday for this new financial product.
Similar to how spot Bitcoin (BTC) and Ethereum (ETH) ETFs function, the proposed exchange-traded product (ETP) aims to provide investors exposure to XRP, alleviating concerns about the custody or transfer of the digital asset.
As the issuer, Canary Capital will take on the risks associated with acquiring and managing crypto assets. However, the filing did not specify the custodian the firm plans to use for the secure storage of the ETF’s underlying assets. Additionally, the filing referred to the product as “Canary XRP ETF” but did not disclose the ticker symbol it will use on exchanges.
The spot XRP ETF will be designed to track the price of the CF Ripple index on the Chicago Mercantile Exchange (CME).
Overcoming Regulatory Hurdles in SEC v. Ripple Case
Despite the increasing interest in a spot XRP ETF from the crypto community, analysts suggest that obtaining approval may take some time. This timeline is closely tied to the outcome of the ongoing SEC v. Ripple case in court.
Last year, Judge Analisa Torres of the Southern District of New York determined that XRP is not considered a security when sold to retail investors. Contrarily, it is deemed a security when sold to institutional investors. Consequently, she imposed a fine of $125 million on Ripple, whereas the SEC sought a total of $2 billion for disgorgement, prejudgment interest, and civil penalties.
Judge Torres’ ruling was expected to bring about a resolution to the four-year-old Ripple case, where both parties experienced partial victories. Nevertheless, the SEC has indicated its desire for a definitive ruling in its favor, seeking to classify XRP as a security regardless of how it is sold, as evidenced by a recent Notice of Appeal.
Nonetheless, Ripple executives remain optimistic that the appellate court will uphold the lower court’s ruling. Meanwhile, Ripple CEO Brad Garlinghouse previously stated that the emergence of “an XRP ETF is simply inevitable.”
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