Cryptocurrency exchange-traded fund (ETF) issuer 21Shares seeks to offer American investors exposure to XRP. The Swiss company on Friday submitted an S-1 form to the Securities and Exchange Commission (SEC) for the initiation of an XRP ETF. Should it receive approval, the 21Shares Core XRP Trust aims to mirror the price of the seventh-largest digital currency by market capitalization through shares that are traded throughout the day.
In a statement, the company expressed its dedication to “continuing efforts to broaden U.S. investor access to the cryptocurrency asset class, and we are eager to lead innovation in the U.S.” XRP is a digital currency developed by the founders of the fintech firm Ripple. 21Shares is known for issuing ETFs and managing spot Bitcoin and Ethereum funds in the U.S., following SEC approvals earlier this year.
Other asset managers, including crypto asset manager Bitwise, are also aspiring to launch an ETF tracking the price of XRP. Asset manager Grayscale recently introduced an XRP Trust and has in the past transformed its similar Bitcoin and Ethereum closed-end funds into official ETFs post-SEC approval for such trading products.
However, the SEC is currently entangled in a prolonged legal battle with Ripple, after filing a lawsuit against the company for $1.3 billion, accusing it of selling unregistered securities in the form of XRP. Last year, Ripple achieved a partial victory in court against the regulator when a judge decided that programmatic sales of XRP to individual investors did not constitute securities. The judge determined that contracts worth $728 million for institutional sales did involve unregistered securities sales, yet this outcome was largely viewed as a victory for the cryptocurrency sector.
Subsequently, the SEC pursued a $2 billion fine against Ripple, but a New York court mandated the firm to only pay a $125 million penalty. The SEC has appealed this decision, though Ripple’s Chief Legal Officer, Stuart Alderoty, recently mentioned to Decrypt his belief that this action will ultimately “backfire” and favor the cryptocurrency industry.
Despite the ongoing legal dispute, Ripple CEO Brad Garlinghouse expressed in an interview last week his conviction that the SEC’s approval of an XRP ETF is “inevitable,” considering the regulator’s previous green lights for Bitcoin and Ethereum products.
Edited by Andrew Hayward