Exchange-traded fund (ETF) issuer WisdomTree has taken steps toward launching an XRP-focused ETF, as indicated by its filing with the U.S. Securities and Exchange Commission (SEC) on Monday.
The proposed WisdomTree XRP Fund, if approved, would trade on the Cboe BZX Exchange. While a ticker symbol has yet to be determined, the Bank of New York Mellon is named as the fund’s administrator.
According to the filing, the fund’s objective is to provide investors with exposure to the price of XRP, minus the trust’s operational expenses and liabilities.
This development follows WisdomTree’s registration of an XRP-related entity in Delaware on November 25. Several other asset managers, including Bitwise, 21Shares, and Canary Capital, have similarly filed for spot XRP ETFs, signaling growing interest in such financial products.
A First for XRP ETFs?
The SEC has not yet approved any spot XRP ETF, and the asset’s regulatory status remains a contentious issue.
Since 2020, the SEC has been locked in a legal battle with Ripple Labs, alleging that the company raised $1.3 billion through XRP sales without registering the token as a security.
In July 2023, U.S. District Judge Analisa Torres ruled that Ripple’s programmatic sales of XRP did not violate securities laws due to their blind-bid structure. However, direct sales of the token to institutional investors were deemed securities violations, resulting in Ripple being ordered to pay $125 million in fines. Both Ripple and the SEC are appealing aspects of that decision.
Regulatory Risks Highlighted
WisdomTree’s filing acknowledges the ongoing uncertainty surrounding XRP’s classification.
The registration statement cautions that “determining whether a particular digital asset qualifies as a security is complex and unpredictable.” It also notes that the SEC has indicated a digital asset’s status may evolve with changing circumstances.
Despite these risks, XRP continues to gain prominence in the crypto ecosystem, now ranking as the world’s third-largest cryptocurrency by market capitalization, following Bitcoin and Ethereum.
Should the SEC approve WisdomTree’s application, it could mark a significant milestone for both the firm and the broader digital asset market. However, regulatory hurdles and legal ambiguity continue to cast a shadow over the introduction of spot XRP ETFs.
