Cryptocurrency index fund manager Bitwise has filed for an XRP ETF, which would allow investors to gain direct exposure to the XRP token. According to Matthew Hougan, Chief Investment Officer at Bitwise, the filing corresponds to the creation of a trust registered in Delaware, although full details will be revealed later.
The document was filed on Monday with the Delaware Department of State’s Corporations Division, under the name Bitwise XRP ETF, with CSC Delaware Trust Company as registered agent, The Block reports.
Regulatory challenges for the XRP ETF
This would be the first XRP ETF to go through the US Securities and Exchange Commission (SEC), and it faces potential challenges. The SEC has had an ongoing legal battle with Ripple, the company behind XRP, after accusing it of raising $1.3 billion through the sale of XRP, an asset the agency considers an unregistered security.
While some crypto ETFs began trading this year, after receiving approval from the SEC, such as Bitcoin spot ETFs and later Ethereum ETFs, an XRP ETF remains a topic of legal debate.
ETFs vs. ETP: A key difference
During a conference at Georgetown University, the director of the SEC’s Division of Investment Management, Natasha Vij Greiner, clarified the difference between ETFs and ETPs. According to Greiner, ETPs are not regulated under the ’40 Act (Investment Company Act of 1940), which means they do not have the same protections or considerations related to asset custody.
This nuance is crucial when considering products like the potential XRP ETF, which could face additional restrictions if the SEC does not approve the proposal.
In summary
By filing for an XRP ETF, Bitwise is looking to open a new door for cryptocurrency investors, but will face regulatory challenges due to the token’s legal history with the SEC. As cryptocurrencies gain more traction in the traditional financial market, this will be a key case to watch in the coming months.
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