Canary Capital Files XRP Exchange-Traded Fund (ETF) With the SEC

The filing indicates growing institutional interest in cryptocurrency assets beyond Bitcoin and Ethereum.

Investment firm Canary Capital is filing a Ripple (XRP) exchange-traded fund (ETF) with the Securities and Exchange Commission (SEC). This follows a similar ETF filing by Bitwise with S-1. The filing highlights the growing institutional interest in cryptocurrency assets beyond Bitcoin and Ethereum.

The CME CF Ripple dollar reference rate will serve as a daily benchmark for XRP’s value, which the proposed Canary XRP ETF aims to track. It incorporates data on XRP trading from major crypto exchanges to provide a comprehensive view of its performance.

According to a Canary Capital spokesperson, they observe a shift from the more progressive regulatory stance of the past. This environment, coupled with increasing investor demand, contributes to the interest in XRP as an enterprise-grade blockchain solution. In this context, the firm believes its investors will gain sophisticated access to the cryptocurrency market through the ETF.

Ripple Faces SEC Scrutiny Over XRP Sales

Following the filing, the SEC has 30 days to comment on the application. Afterward, the agency has an additional 240 days to make a final decision. Typically, the SEC review entails an initial 45-day period, with the possibility of additional time if the SEC requests more information.

If the SEC adheres to its standard timeline, a final ruling on the ETF could be expected by June 2025. However, the agency's decision will also factor in the ongoing SEC lawsuit against Ripple Labs.

The lawsuit centers on whether XRP sales constitute securities violations, which could pose a challenge in approving an ETF for the cryptocurrency. Since December 2020, the SEC has alleged that Ripple engaged in illegal XRP sales, impacting the potential for ETF approval.

Despite the SEC's claims, the legal proceedings and the operation of the XRP ETF are not directly linked.

Ripple Optimistic Despite SEC’s Ongoing Appeal

In July 2023, a judge ruled that sales of XRP to retail customers do not violate securities laws, a decision that brought relief to XRP holders who feared regulatory repercussions.

However, the legal battle continues as the SEC filed an appeal against the ruling. In response, Ripple executives expressed optimism that the SEC will eventually settle, anticipating that the agency risks losing in court if they choose to continue pursuing the case.

This development could bode well for regulators, who may finally receive clearer guidance for XRP. The SEC has recently adjusted its approach to crypto asset securities, with the agency even admitting to miscommunicating in an amended complaint that was part of the Binance lawsuit.

Although the SEC expressed regret over using the term 'crypto asset securities,' which they say confused the industry, the agency's stance on XRP remains unclear.

XRP May Follow Ether’s Path to Approval

Meanwhile, the Canary ETF is set to influence the SEC's future decisions on crypto. Investors eagerly await clarity on the regulatory fate of XRP and whether the ETF will be approved.

If approved, the ETF would facilitate greater accessibility for both institutional and retail investors to purchase XRP. Notably, a recent development in Ether's approval for spot ETFs could serve as a hopeful precedent for XRP.

The SEC's recognition of Ethereum as a non-security followed an investigation into whether Ether violated securities rules, opening up the possibility for a similar path to be paved for XRP.

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