The cryptocurrency community has been stirred by Bitwise’s recent filing for the first-ever Spot XRP ETF with the U.S. Securities and Exchange Commission (SEC). This is a significant moment for Ripple’s XRP, drawing attention to whether a futures market will be required for approval—especially considering the approach taken for Bitcoin and Ethereum spot ETFs. SEC Commissioner Hester Peirce recently shared insights on the subject, shedding light on the potential regulatory requirements that may affect the proposed ETF.
Bitwise, a well-known crypto asset management firm, officially submitted its application for the Spot XRP ETF on October 2, 2024. The ETF will give investors direct exposure to XRP’s value, reflecting the coin’s market price while accounting for operational expenses. This move by Bitwise places XRP in the company of Bitcoin and Ethereum, which have similar ETFs available, and signals growing interest in XRP as a key digital asset.
In its application, Bitwise detailed how the XRP holdings for the ETF will be securely managed by Coinbase Custody Trust Company, providing protection and oversight for investors. While Coinbase Custody is not insured by the Federal Deposit Insurance Corporation (FDIC), the trust will be safeguarded by private insurance, following the same protocol as other crypto ETFs managed by Bitwise.
This filing has a wave of speculation and excitement across the crypto market. However, it also raises an important question: will an XRP futures market be necessary for the Spot XRP ETF to gain approval?
A key question surrounding this filing is whether a futures market is essential for the approval of an XRP Spot ETF. Bitcoin and Ethereum both required established futures markets before their spot ETFs were approved, as these markets helped regulators better understand the underlying assets.
SEC Commissioner Hester Peirce recently discussed this issue in an interview on the Thinking Crypto Podcast, offering some clarity. According to Peirce, a spot ETF does not always need a futures market for approval. The decision often depends on the specific product being proposed and the nature of the asset it represents.
Peirce explained that while Bitcoin and Ethereum benefited from having active futures markets to guide regulatory approval, this doesn’t automatically imply the same requirement for every cryptocurrency. XRP, being a well-established digital asset with its own distinct market dynamics, may not necessarily need a futures market to get its Spot ETF approved.
She emphasized that each case should be evaluated individually, stating, “We’ve seen how futures markets played a role in helping regulators with Bitcoin and Ethereum, but that doesn’t mean every asset needs one. Each crypto asset brings unique factors to consider.”
Interest in an XRP ETF has been building for some time, especially after recent moves related to Ethereum ETFs. Ripple’s CEO, Brad Garlinghouse, has hinted at the potential for such a product, further fueling discussions within the community. Garlinghouse has long championed XRP’s role in the financial sector, and the possibility of an ETF now seems more tangible with Bitwise taking formal steps toward its approval.
If approved, a Spot XRP ETF would place XRP in direct competition with Bitcoin and Ethereum, solidifying its position as a major player in the crypto space. Institutional investors, who have already shown significant interest in crypto ETFs, may see XRP as a compelling addition to their portfolios.
Bitwise has prioritized the security of the XRP holdings in this ETF by partnering with Coinbase Custody Trust Company. Though Coinbase Custody does not offer FDIC insurance, the firm provides robust security measures and private insurance coverage to protect the assets. This move mirrors the protective measures implemented in other Bitwise-managed ETFs, ensuring investor confidence in the trust’s safekeeping of their XRP investments.
The secure custody setup plays a crucial role in providing transparency and security, which are vital components of any cryptocurrency-based financial product. By leveraging a reputable institution like Coinbase Custody, Bitwise is enhancing the trustworthiness of its proposed XRP ETF, making it more attractive to potential investors.
The filing of this Spot XRP ETF marks a critical juncture for XRP, but there are still regulatory hurdles to clear. While SEC Commissioner Peirce’s comments offer hope that a futures market may not be required, the final decision rests with the SEC. The SEC’s assessment of XRP’s market dynamics and the unique aspects of this cryptocurrency will ultimately determine whether the proposed ETF will be approved.
If the Spot XRP ETF does get the green light, it could fundamentally change XRP’s market presence and open the door for greater institutional investment. This would not only elevate XRP as a serious investment option but also place it in direct competition with Bitcoin and Ethereum, both of which have benefitted from their own spot ETFs.
Conclusion: What’s Next for XRP’s ETF Journey?
While the road to approval is still uncertain, the filing of the first-ever Spot XRP ETF by Bitwise is a major development. With Commissioner Hester Peirce’s recent statements, the possibility of an XRP ETF moving forward without a futures market offers a glimpse of optimism for investors. The SEC’s upcoming decision will be pivotal, and the outcome will undoubtedly have a lasting impact on XRP’s future in the financial world.
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