As Ripple continues its battle with the Securities and Exchange Commission (SEC), the cryptocurrency market may soon welcome an XRP exchange-traded fund (ETF).
Canary Capital, a new cryptocurrency investment company, has officially filed to launch an exchange-traded fund (ETF) for XRP.
An XRP ETF would operate like other cryptocurrency ETFs, providing investors with a way to gain exposure to XRP without directly holding or managing the cryptocurrency. The ETF would be tied to XRP’s performance, either by holding actual XRP tokens or by using financial instruments that represent its value.
Shares of the XRP ETF would be listed and traded on traditional stock exchanges. This allows investors to buy and sell shares as they would with stocks, making it easy to participate in the XRP market without worrying about the complexities of digital wallets or private keys.
Steven McClurg, founder of Valkyrie Funds, another crypto investment firm, also started Canary Capital. A spokesperson for Canary told Fox Business, “We’re seeing positive changes in regulations and more interest from investors who want access to cryptocurrencies beyond just Bitcoin and Ethereum. These investors seek opportunities to invest in advanced blockchain solutions like XRP.”
This is coming as the U.S. Securities and Exchange Commission (SEC) and Ripple Labs, the company behind the cryptocurrency XRP, have been in a legal battle on the stance of XRP being a security or commodity.
The case began on December 22, 2020, when the SEC sued Ripple, accusing the company of raising over $1.3 billion through the illegal sale of XRP. The SEC said XRP should be considered a security (like a stock), which would mean it needs to follow strict rules.
Ripple disagreed, saying that XRP is more like Bitcoin and Ethereum, which the SEC doesn’t consider to be securities. Ripple also argued that the SEC had never given them clear guidance on whether XRP was a security before the lawsuit.
In July 2023, a judge made a decision that was partly in Ripple’s favor. The court stated that XRP was not a security when sold to regular people on exchanges. However, some sales to larger institutions were considered unregistered securities.
Ripple could continue selling XRP in specific situations, though restrictions applied to institutional sales. The SEC disagreed with this ruling and filed an appeal in October 2023 to challenge the aspects of the decision that favored Ripple.
Initially, the SEC sought $2 billion in fines from Ripple, but the court imposed a penalty of only $125 million for unregistered institutional sales. Ripple was also prohibited from selling XRP without proper registration in the future, potentially impacting certain business operations.
