21Shares Enters the Race to Launch an XRP ETF, Targeting Growing Investor Interest

21Shares, a prominent issuer in the exchange-traded fund (ETF) industry, has recently entered the race to launch an ETF based on XRP

21Shares, a leading exchange-traded fund (ETF) issuer, has filed with the U.S. Securities and Exchange Commission (SEC) to launch an ETF tracking the price of XRP, the digital asset linked to Ripple.

According to the filing, which was made on Friday, the 21Shares Core XRP Trust will be listed on the Cboe BZX Exchange if approved. This listing would allow investors to gain exposure to XRP through a regulated exchange platform, potentially making it easier and more secure for a broader range of investors to access the digital asset.

21Shares is joining a growing list of financial firms vying to introduce ETFs tied to cryptocurrencies as demand for crypto-related investment products continues to grow in mainstream markets.

The filing comes after Bitwise, a cryptocurrency index fund manager, filed to launch an XRP ETF earlier this year. In total, at least three firms are now known to be seeking approval for XRP ETFs from the SEC.

Approval for the 21Shares XRP ETF would further expand the firm's lineup of cryptocurrency-focused investment products in the U.S. 21Shares already offers ETFs tracking Bitcoin, Ethereum, and several other digital assets, which are listed on various exchanges including the New York Stock Exchange.

The proposed 21Shares XRP ETF aims to replicate the performance of the XRP token by relying on the recently launched CME CF Ripple-Dollar Real-Time Index (XRPUSD_RTI). This index provides up-to-the-minute pricing data for XRP against the U.S. dollar, enabling the ETF to track XRP’s real-time market value.

By using this index, the ETF seeks to offer investors accurate exposure to XRP’s performance in a regulated and transparent format, bringing enhanced reliability to crypto asset tracking in traditional markets.

Furthermore, 21Shares has positioned its proposed XRP ETF as a more “cost-efficient way” for investors to gain exposure to XRP than by directly purchasing and holding the token. This approach could reduce certain complexities and costs associated with directly owning cryptocurrency, such as storage and custody.

In the filing, 21Shares also underscores that XRP should not be viewed as a security, a point that aligns with recent developments in the Ripple legal case. Meanwhile, the SEC recently indicated it would not contest the token’s legal classification as part of its appeal in the case involving Ripple, signaling a cautious approach to regulatory challenges surrounding XRP.

To the surprise of many, XRP’s status as a security has not been fully addressed by the SEC despite the agency’s ongoing legal battle with Ripple. This lack of clarity has presented a unique opportunity for financial firms seeking to launch XRP ETFs, as the SEC’s stance on the matter could ultimately determine the fate of these products.

However, the filing does include several risk factors for potential investors to consider. These risks include the possibility of an increase in XRP’s circulating supply, which could affect its price; risks of market manipulation; and potential forks within the XRP Ledger (XRPL) that could impact the asset’s stability. Another noted risk is the chance of a “final determination” deeming XRP a security, which could introduce significant regulatory implications.