On Tuesday, Canary Capital officially joined an XRP ETF race, following the same move by Bitwise one week ago. Canary Capital Group, a crypto-focused investment firm founded by former Valkyrie Funds co-founder Steven McClurg, filed to create a spot XRP exchange-traded fund (ETF) that would track the asset’s price using the Chicago Mercantile Exchange CF Ripple index.
Interestingly, the benchmark itself was added only recently, in July, which some Twitter/X users interpreted as a sign of a coordinated effort before the inevitable launch of the product. Some have also pointed out the timing of the filing as a hopeful sign for the XRP ETF, as the XRP community is just days away from Ripple Swell 2024, this year’s edition of the annual conference hosted by Ripple Labs Inc.
Bitwise, which filed for the XRP ETF on October 2, already has two similar crypto products, Bitwise Bitcoin ETF (BITB) and Bitwise Ethereum ETF (ETHW). On September 12, crypto asset manager Grayscale Investments debuted its Grayscale XRP Trust, a move that many speculated was done as a step toward XRP spot ETF.
As asset managers start lining up for the XRP ETF, this may suggest that Wall Street’s confidence in Ripple’s native token is rising. But how much of this optimism is warranted?
Just a matter of time?
Nate Geraci, president of investment advising firm The ETF Store, expressed his optimism for the XRP ETF approval, suggesting that such a product would be eventually launched, but the timing for its debut is less clear. The expert expressed his belief that the decision on the applications will likely take much longer unless there’s a change in the US administration.
Given that the US presidential race is currently a toss-up between the sitting vice president Kamala Harris and former president Donald Trump, it’s easy to infer that by change in the administration, Geraci means Trump’s victory.
Indeed, Joe Biden’s administration got a bad rep in the crypto community due to a string of enforcement actions taken by the U.S. Securities and Exchange Commission against several industry heavyweights such as Binance, Kraken, and Coinbase. Under the leadership of SEC Chair Gary Gensler, the agency has adopted a more aggressive stance—condemned by industry leaders as “regulation by enforcement”— toward digital assets, listing dozens as unregistered securities.
However, regardless of who comes on top of the 2024 presidential race, the outlook for the crypto industry looks promising, as bipartisan support seems to be building for the strategic Bitcoin reserve. Some Democrats have urged the party leaders to revamp the strained relationship with the digital assets sector and select a pro-innovation SEC chair.
Ripple’s ongoing legal battle calls XRP ETF into question
The push for XRP ETFs follows the successful launch of Ethereum ETFs that received a green light from the SEC in July 2024, seemingly settling the long-time dispute on whether Ether should be considered a security or a commodity. The approval for ETH ETFs set a precedent for other L1 blockchains, such as Solana which is already awaiting the decision on the June ETF filing by VanEck.
For Ripple, however, the situation is more complicated due to the years-long legal battle with the SEC that started in December 2020, with the regulator alleging that the company had conducted an unregistered securities offering by selling XRP.
In July 2023, Ripple achieved a partial victory when a U.S. District Court ruled that XRP sales on public exchanges do not constitute securities sales, providing clarity for retail investors. However, the court also ruled that institutional sales of XRP could be classified as securities, which meant that Ripple still faces significant regulatory scrutiny for certain parts of its business. Nevertheless, the ruling has been received by the XRP community as a major victory, instilling hopes of the final victory for the company.
The SEC has since continued to pursue its case, appealing parts of the ruling. The XRP bulls, however, remain optimistic.
“We're seeing encouraging signs of a more progressive regulatory environment coupled with growing demand from investors for sophisticated access to cryptocurrencies beyond Bitcoin and Ethereum - specifically investors seeking access to enterprise-grade blockchain solutions and their native tokens such as XRP,” a spokesperson for Canary Capital told Fox Business as quoted by Eleanor Terrett on Twitter/X
The encouraging signs in question are believed to be connected to the upcoming elections on November 5 when millions of Americans will face a clear choice for president on election day, between Democratic Vice-President Kamala Harris and Republican former President Donald Trump. The tight race prompted both candidates to scramble for the support of fringe groups of single-issue voters, including crypto bros.
President Donald Trump, who repeatedly trashed crypto during his first term, stating that the value of Bitcoin was “based on thin air,” had since experienced a change of heart and went full-on crypto aficionado, promising, among many things, to support US Bitcoin miners, block CBDCs development, create a strategic Bitcoin reserve, and to pardon Ross Ulbricht, the Silk Road’s pirate king turned libertarian hero.
The Democratic nominee Kamala Harris is yet to take an official stance on the crypto industry, although she mentioned her plans to “encourage innovative technologies like AI and digital assets” during a New York City fundraiser on September 22. So far, this was her first and only official comment on cryptocurrency as a presidential candidate, which left the Democrat-leaning part of the community hungry for more details.
