Canary Capital filed with the SEC on October 8, 2024, to create the first spot ETF based on the XRP cryptocurrency. This is the second time such a fund has been filed, as Bitwise filed a similar application on October 2. A spot ETF allows investors to trade assets without having to directly own the cryptocurrency. Canary's ETF will track the price of XRP using the CME CF Ripple Index, a real-time index that uses quotes from multiple exchanges.
The ETF will be structured as a trust, with actual XRP tokens held in a New York-registered custodian account. This means the ETF will be based on actual XRP ownership rather than derivatives, reducing counterparty and credit risks.
The main obstacle to approving such a fund is the ongoing legal dispute between the SEC and Ripple, where the SEC argues that XRP is an unregistered security. Although the court previously ruled that XRP sales on secondary markets are not securities, the SEC continues to challenge that ruling in the appellate court.
The approval of an XRP spot ETF could have a significant impact on the market, as it would provide investors with easy access to the cryptocurrency through traditional financial channels. However, the outcome of the legal proceedings and the final decision of the SEC remain key factors for the successful launch of this fund.
