Key Points
* 21Shares has submitted an S-1 application to the SEC for a spot XRP ETF, with Coinbase set to serve as the fund’s custodian, marking another major institutional push into crypto investment vehicles
* The application comes amid ongoing legal uncertainty between SEC and Ripple Labs, with a 2023 judgment ruling XRP is not a security for programmatic exchange sales, though the case remains under appeal
SEC Filing Details and Trust Structure
21Shares has officially filed a Form S-1 with the U.S. Securities and Exchange Commission (SEC) on November 1, 2024, seeking approval for its Core XRP Trust shares to be listed on the Cboe BZX Exchange. The proposed investment vehicle is designed as a passive investment trust that will track the CME CF Ripple-Dollar Reference Rate, calculated by CF Benchmarks Ltd.
The Trust specifically aims to provide indirect exposure to XRP’s market performance through traditional brokerage accounts, rather than direct XRP ownership. This structure is intended to reduce barriers and risks typically associated with direct cryptocurrency holdings or spot market purchases.
Market Context and Previous Success
21Shares enters the XRP ETF race with a strong track record, having successfully launched both Bitcoin and Ethereum ETFs earlier in 2024. Their Bitcoin ETF (ARKB), developed in partnership with Ark Invest, has demonstrated significant market interest, attracting $2.6 billion in net inflows. Their Ethereum ETF (CETH) has also shown promise, securing $21.8 million in investments.
Regulatory Landscape and Future Outlook
The path to approval for an XRP ETF faces unique challenges due to the ongoing legal battle between the SEC and Ripple Labs, which began in 2020 when the SEC alleged Ripple raised $1.3 billion through unregistered XRP sales. Despite these hurdles, institutional interest remains strong, with other asset managers including Canary Capital and Bitwise also pursuing XRP ETF approvals.
Ripple CEO Brad Garlinghouse has expressed optimism about eventual SEC approval, citing the regulator’s recent approvals of Bitcoin and Ethereum ETFs as positive precedents. However, the regulatory landscape remains complex, with the SEC’s ability to delay decisions or defer to a new administration following potential leadership changes under future presidencies.
