Ripple’s XRP is poised for a pivotal moment as analysts suggest it may soon witness the approval of its first spot exchange-traded fund (ETF). The anticipated green light from the U.S. Securities and Exchange Commission (SEC) could arrive as early as September 18, with analysts from Bloomberg highlighting both Ripple’s XRP ETF and Rex-Osprey’s Dogecoin ETF as frontrunners for approval.
Investors should note that the REX-Osprey XRP ETF, with the proposed ticker symbol XRPR, features a unique structure compared to traditional spot crypto ETFs. This distinction may have enabled a faster approval process; however, it raises questions regarding its overall value proposition for investors.
Historically, Bitcoin and Ethereum have paved the way for cryptocurrency ETFs, leading to significant market interest. The first spot Bitcoin ETF was approved in January 2024, soon followed by approvals for spot Ethereum ETFs in July of the same year. Currently, estimates suggest there is nearly $180 billion invested in Bitcoin and Ethereum ETFs combined.
The landscape for ETFs varies significantly, largely due to the SEC’s regulatory classification of individual cryptocurrencies. Most existing spot ETFs are designed as Exchange-Traded Products (ETPs) under the 1933 Securities Act. Under this framework, the approval process for such products can extend up to 240 days, with the SEC carefully assessing each case.
However, Rex Shares and Osprey Funds have found a way to expedite this procedure. Their proposed ETFs qualify as regulated investment companies under the 1940 Investment Act, allowing for management via a subsidiary in the Cayman Islands. This enables approval timelines to potentially shrink to just 75 days.
For investors, the specific structure of XRPR could significantly influence fees, tax implications, and the nature of investments held within the fund. Notably, XRPR plans to impose a management fee of 0.75%, considerably higher than the 0.25% fee charged by the iShares Bitcoin Trust. The proposed fund aims to maintain a diversified portfolio, with 20% allocated to cash and cash alternatives, while another 40% is earmarked for investments in other XRP ETFs—potentially including international and non-spot varieties.
In addition to the REX-Osprey XRP ETF, reports indicate that seven additional spot XRP ETFs are awaiting SEC approval. With key decisions expected in October and November, investors are advised to approach the upcoming months with caution. This window provides an opportunity for potential investors to compare fees and offerings between the various ETFs, ensuring they make informed decisions that align with their investment strategies.
