Canary Capital follows Bitwise in applying to launch a spot XRP ETF in the United States

What’s new? Crypto investment firm Canary Capital has filed an application with the US Securities and Exchange Commission (SEC) to launch a spot exchange-traded fund (ETF) based on the XRP token with a capitalization of $30 billion from the fintech company Ripple. Earlier this month, asset manager Bitwise became the first firm to apply to register such a product in the United States.

Application for the SEC

What else is known? The Canary XRP ETF will give investors access to one of the largest altcoins through a traditional brokerage account without the risks inherent in buying and holding cryptocurrency directly. The company has not yet appointed a custodian who will be responsible for holding XRP for the fund.

Canary Capital has filed a Form S-1 with the SEC. It is designed to register new securities (in this case fund shares) and is a required part on the way to launching an ETF. The distinctive feature of this form is that it does not regulate the time frame in which the regulator must make a decision.

The second mandatory step in launching an ETF is filing a Form 19b-4 trading rule change. It must be sent to the SEC by the stock exchange where the new product will be listed.

Canary Capital founder Steven McClurg noted the growing demand for access to cryptocurrencies beyond bitcoin and Ethereum. He also noted signs of progress toward the adoption of a more progressive regulatory framework for the digital asset industry in the US.

Crypto com sues the SEC for exceeding its authority and violating the Administrative Procedure Act

The exchange emphasized that the commission cannot regulate commodity crypto derivatives

Read more

Separately, he noted investor interest in a token from Ripple, which provides enterprise-grade blockchain solutions and works with many government agencies around the world.

McClurg is also the founder of the crypto investment company Valkyrie, which owns the BRRR spot bitcoin fund BRRR that launched on Nasdaq. It ranks sixth among US BTC ETFs in terms of fund inflows and eighth in terms of assets under management (AUM) with $645 million and $739 million, respectively. In March this year, Valkyrie was purchased by European investment firm CoinShares.

The SEC approved spot bitcoin funds on January 11, 2024; ETH ETFs were admitted to the market on July 23. The approval was preceded by a lengthy period of document amendments and litigation. In particular, Grayscale managed to challenge the SEC’s improper refusal to convert the trust into a spot BTC ETF.

XRP-based funds may also face launch hurdles, as the asset’s status is the subject of a multi-year legal battle between the SEC and Ripple. The regulator believes the asset is a security and its $1,3 billion initial sale was improper because it was not properly registered.

The court refused to recognize retail sales as a violation and imposed a $125 million fine on Ripple for institutional transactions, but the SEC is currently considering appealing the verdict. This circumstance may prevent the regulator from approving funds based on the asset.