Bitwise's Ambitious Move for an XRP ETF
Bitwise Asset Management has made a bold move by filing an application for a U.S.-based exchange-traded fund (ETF) focused on XRP, which is the world's seventh largest cryptocurrency by market value. According to Bitwise's S-1 registration statement submitted to the Securities and Exchange Commission (SEC), the Bitwise XRP ETP will directly hold XRP. This application comes shortly after Grayscale Investments introduced an XRP trust as part of its cryptocurrency investment products, sparking industry speculation about the potential for a Grayscale XRP ETF.
Understanding XRP and Its Role
XRP is the native token of the XRP Ledger, a blockchain network specifically designed to facilitate faster and more efficient cross-border payments. To put it simply, if sending money across countries is like mailing a letter, XRP aims to be as fast as sending an email. Recently, XRP was trading at approximately 58 cents, which marked a decrease of over 4% in the past 24 hours, according to data from CoinMarketCap.
The Growing Appetite for Crypto Investments
This year has seen a noticeable increase in issuer efforts to meet the rising demand for crypto-focused investments, particularly those linked to the ongoing price movements of major digital assets. Bitwise has already introduced ETFs based on the spot price of Bitcoin and Ether, the two largest cryptocurrencies by market capitalization. To clarify, Bitcoin is similar to digital gold, while Ether is the token that powers the Ethereum blockchain, often used for applications like smart contracts.
The SEC Approval Process
Before the Bitwise XRP ETF can be traded, the SEC needs to approve Bitwise's S-1 filing and a subsequent 19b-4 submission, which is a formal request for a rule change that demonstrates how the issuer has addressed the SEC's concerns.
Spot Bitcoin ETFs' Success and Regulatory Climate
The Bitwise Bitcoin ETF has been a significant success, generating over $2.1 billion in net inflows, ranking fourth among 11 funds launched after gaining SEC approval in January. These successful ETFs have accumulated nearly $19 billion in inflows, according to U.K. asset manager Farside Investors. This success appears to have fostered a more favorable regulatory environment. In July, the SEC approved nine ether-based funds, including the Bitwise Ethereum ETF, which has seen approximately $326 million in inflows, making it the third most popular among new offerings.
Emerging Trends in Crypto ETFs
During the summer, both 21Shares and VanEck filed applications with the SEC for ETFs based on the spot price of Solana, the token of the Solana blockchain and the fifth largest cryptocurrency by market capitalization. Last month, the SEC approved options trading for BlackRock's iShares Bitcoin Trust, which signals a more open regulatory stance. In finance, an option is a contract that gives its owner the right, but not the obligation, to buy or sell an underlying asset, which in this case would be Bitcoin.
Bitwise's Vision for the Future
Hunter Horsley, the CEO of Bitwise, expressed his enthusiasm for the transformative potential of blockchain technology on monetary systems. "It's why for the past seven years we've helped investors access the opportunities in the space, and we're excited to continue that work with our filing," he stated.
