The cryptocurrency landscape could be set for a seismic shift following the submission of four separate 19b-4 forms by the Cboe Exchange to the SEC. The documents, which were submitted last Thursday, seek approval for a rule change that would allow for the listing and trading of shares of spot XRP ETFs. The funds are to be managed by Wisdomtree, Bitwise, 21shares, and Canary.
These filings come on the back of the approval of spot Bitcoin and Ethereum ETFs in early 2024 and draw heavily on the July 2023 SEC-Ripple Labs ruling. This landmark decision determined that XRP, unlike its predecessors, is not a security. However, it did find Ripple’s institutional sales in violation of securities laws.
The distinction of XRP from Bitcoin and Ethereum lies in the lack of a futures market on the CME for the former. Traditionally, this has been a key requirement by the SEC for ETF approvals. The applications contend that alternative measures such as on-chain analytics, price monitoring, and market structure analysis are sufficient in providing protection against fraud and manipulation.
Each fund manager brings a unique perspective to the table in arguing for the stability of the XRP market. WisdomTree leans on global liquidity and arbitrage opportunities, while Bitwise draws parallels with Bitcoin and Ethereum to showcase robust price discovery. 21Shares turns the spotlight on XRP’s pricing mechanisms and trading volume consistency. Canary, on the other hand, underscores the asset’s use case in payments and remittances.
The applications also address the contentious issue of sourcing, specifically emphasizing that the ETFs would source XRP from exchanges and trading platforms, sidestepping any direct involvement with Ripple Labs where the SEC had previously flagged securities law violations.
The SEC now has a 45-day window from the date of publication in the Federal Register to review these filings and make a decision. The regulator can approve, disapprove or initiate proceedings to determine whether to disapprove the rule change. This review period can be extended to 90 days, provided the SEC furnishes a reason for the extension or if Cboe concurs with the extension.
Adding to the momentum, Grayscale recently tabled a proposal to convert its XRP Trust into an exchange-traded fund on NYSE Arca, thereby broadening access to XRP under the watchful eye of institutional oversight.
These filings represent a significant step towards mainstream adoption and regulatory clarity, with the potential to reshape the broader cryptocurrency market landscape. Keep an eye on this space as the race to launch a spot XRP ETF in the US heats up.
