Canary Capital Joins Race for XRP ETF Approval in the US

TLDR

• Canary Capital filed for a spot XRP ETF with the SEC
• This is the second XRP ETF filing, following Bitwise’s earlier submission
• Canary Capital cites growing investor demand and a progressive regulatory environment
• The SEC’s ongoing appeal of the Ripple lawsuit ruling creates uncertainty
• Approval for XRP and other altcoin ETFs remains doubtful under the current SEC

Canary Capital, a crypto investment firm, has recently filed for a spot XRP Exchange-Traded Fund (ETF) with the U.S. Securities and Exchange Commission (SEC).

This marks the second such filing for an XRP ETF in the United States, following Bitwise’s initial submission.

The proposed product, named the Canary XRP ETF, was submitted through a Form S-1 registration statement to the SEC.

This move comes at a time when the cryptocurrency industry is experiencing increased interest in ETF products for various digital assets.

Canary Capital, founded by Steven McClurg of Valkyrie Funds, expressed optimism about the current market conditions.

In their filing, the company noted signs of a “progressive regulatory environment coupled with growing demand from investors for sophisticated access to cryptocurrencies beyond Bitcoin and Ethereum.”

The timing of this filing is significant, as it follows the recent approvals of spot Bitcoin ETFs by the SEC.

These approvals have sparked hope among crypto enthusiasts and investment firms that similar products for other cryptocurrencies might soon follow.

However, the regulatory landscape for XRP remains complex. The SEC is currently appealing a July 2023 court ruling in its lawsuit against Ripple Labs.

This ruling stated that XRP is not a security when traded on secondary markets. The ongoing appeal creates uncertainty about XRP’s regulatory status and could impact the SEC’s decision on XRP ETF applications.

Despite these challenges, Canary Capital appears confident in moving forward with their filing. The proposed ETF would track the price of XRP, offering investors exposure to the cryptocurrency without directly owning or managing it.

The crypto industry has seen growing interest in ETF products for various digital assets. Following the success of Bitcoin ETFs, firms have been eager to expand offerings to include other popular cryptocurrencies.

However, the SEC’s stance on many altcoins remains unclear, which could pose hurdles for approval of ETFs beyond Bitcoin and Ethereum.

The SEC, under the leadership of Gary Gensler, has maintained a cautious approach to cryptocurrency regulation.

The commission has continued to take enforcement actions against various crypto firms and projects, citing concerns about investor protection and market integrity.

This regulatory environment has led to mixed reactions within the crypto industry. While some view the recent Bitcoin ETF approvals as a positive sign, others remain skeptical about the prospects for similar products based on other cryptocurrencies.

The outcome of the SEC’s appeal in the Ripple lawsuit could have significant implications for the future of XRP and potential ETF products based on it.

A final ruling in favor of Ripple might pave the way for easier approval of XRP-based financial products, while a decision supporting the SEC’s position could create additional barriers.