The SEC document shows that the updated registration statement describes the plan for the fund to list on the Cboe BXZ exchange. This would provide investors with direct exposure to XRP without needing to own the digital asset.
The Canary XRP ETF is a statutory trust of Delaware. Its investment objective is to follow the evolution of XRP. Its benchmark is the XRP CCIXber 60m of New York from CoinDesk.
The fund will own XRP, and custody will be performed through a designated trust company. This ETF should be more attractive to investors who wish to access a cryptocurrency in a more transparent and straightforward manner. Unlike futures-based products that use derivatives, this ETF offers greater appeal for investors looking to access a cryptocurrency in a more transparent and straightforward manner.
After its approval, the ETF shares could be purchased by investors through traditional brokerage accounts and traded on the Cboe BZX exchange. Investors would benefit from fluctuations in the price of XRP without having to manage a wallet or trade on cryptocurrency exchange platforms. This reflects the structure of existing spot Bitcoin ETFs, but with a focus on Ripple's native token.
A previous delay in the SEC's decision has not deterred Canary Capital. With its amended application, the firm joins a small but growing group of issuers betting on the demand for cryptocurrency-backed exchange-traded products.
The disclosure also reveals some of the relevant risks. The trust is not subject to the Investment Company Act of 1940. Therefore, holders do not receive the protection offered by a mutual fund or a registered investment advisor. However, the dismissal of the lawsuit against XRP by the U.S. appeals court has further bolstered optimism about XRP's regulatory position.
The ETF also warns that closures of cryptocurrency exchange platforms or custody vulnerabilities can lead to significant losses. However, this action indicates greater optimism regarding regulators potentially greenlighting a spot XRP ETF. The SEC's response will determine if XRP will become part of the digital assets offered within the structure of regulated ETFs.
