Canary Capital has officially filed an S-1 with the United States Securities and Exchange Commission (SEC) to launch a spot XRP ETF.
This ETF is intended to give investors direct exposure to the value of XRP, the token built on the XRP Ledger, without needing to buy, hold, or manage XRP directly. A spokesperson for the company said:
“We’re seeing encouraging signs of a more progressive regulatory environment coupled with growing demand from investors for sophisticated access to cryptocurrencies beyond Bitcoin and Ethereum – specifically investors seeking access to enterprise-grade blockchain solutions and their native tokens such as XRP.”
Investment strategy and structure
Canary Capital was founded by Steven McClurg, the creator of Valkyrie. In the SEC filing, it explained that their XRP ETF will trade on an as-yet-unnamed exchange.
The ETF, structured as a trust, will issue shares to represent the XRP held by the trust. The value of the trust’s shares will track the price of XRP using the CME CF Ripple – Dollar Reference Rate – New York Variant.
The Trust will hold actual XRP tokens, which will be stored by an XRP Custodian, a New York State-chartered trust company specializing in digital assets.
While the custodian isn’t FDIC-insured, Canary assured that it has insurance coverage through private carriers to mitigate risks related to holding XRP.
Getting the ETF approved might hit some bumps because of the SEC’s ongoing battle with Ripple Labs over whether XRP counts as an unregistered security.
Unlike Bitcoin and Ethereum, XRP was not mined gradually. When the XRP Ledger launched in 2012, 100 billion tokens were created upfront.
Ripple retained 20 billion tokens, with the remaining 80 billion supposedly going to support the ecosystem.
Latest with Ripple and SEC
The SEC appealed Judge Analisa Torres’s August decision, which ruled that XRP sales on secondary markets to regular retail investors aren’t securities transactions.
Even though Ripple was hit with a $125 million penalty for earlier violations (a big cut from the original $2 billion demand), the appeal caused a dip in XRP’s price.
Meanwhile, XRP supporters have started a petition called “Stop the SEC’s Unnecessary and Frivolous Appeal in the Ripple v. SEC Case.”
At press time, they had gathered over 8,300 signatures, with 569 new ones coming in just the last 24 hours. They’re aiming for 10,000 signatures.
But even though it’s popular, this petition won’t legally change the court’s decision. Coinbase has referenced the SEC’s appeal in their own fight with the commission, saying it shows just how confused the regulators are about crypto.
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