Race for First XRP ETF Begins as Cboe Files Multiple Applications

On Thursday, the Chicago-based Cboe Exchange submitted four applications to the U.S. Securities and Exchange Commission (SEC) to list and trade spot XRP exchange-traded funds (ETFs). These applications, put forth by WisdomTree, Bitwise, 21Shares, and Canary, represent a significant step toward potential ETF status for XRP in the United States, alongside established crypto assets like Bitcoin and Ethereum .

Cboe's filings underscore several arguments supporting the approval of a spot XRP ETF, drawing on the legal landscape shaped by Ripple Labs’ partial court victory in July 2023. This ruling determined that programmatic sales to retail investors did not constitute investment contracts under federal law. While this decision is under appeal, the Cboe filings assert that XRP should not be considered a security in the current legal framework.

These ETF applications arise amidst growing interest in crypto-focused investment vehicles, despite recent market challenges. XRP, as the fourth-largest digital asset by market capitalization, has experienced a price decline of around 33% from its peak near $3.40 in late January.

The formal 19b-4 submissions to the SEC are pivotal, as they seek approval for listing on the Cboe BZX Exchange. Once published in the Federal Register, the SEC generally has an initial 45-day window to approve, deny, or extend its review, with the possibility of taking up to 240 days for a final decision. Fox Business correspondent Eleanor Terrett highlighted the extensive scrutiny the applications will face, underscoring that submission does not guarantee approval.

The regulatory context is further complicated by the SEC’s ongoing appeal against Ripple Labs in the Second Circuit Court, aiming to overturn the July ruling distinguishing XRP’s programmatic sales from standard securities offerings.

Ripple CEO Brad Garlinghouse mirrored the anticipation surrounding these applications by signaling the start of a regulatory countdown on social media. While he did not comment in detail, his acknowledgment has energized XRP supporters who view the potential ETF approval as a significant step toward mainstream acceptance.

Unlike Bitcoin and Ethereum, whose ETFs benefited from established CME futures markets, XRP lacks such a product, presenting an additional regulatory challenge. Asset managers have proposed various safeguards to mitigate past SEC concerns, including market integrity and investor protection measures.

Issuers plan to source XRP from diverse secondary markets rather than directly from Ripple Labs. They also propose robust oversight mechanisms to detect trading manipulation, alongside secure token storage with licensed custodians to minimize risk. Furthermore, the applications include mechanisms to pause trading during extreme volatility to protect investors, particularly on the retail side.

These strategies mirror approaches seen in other crypto ETF filings, such as Cboe’s previous proposals for Solana ETFs, which were revised following regulatory feedback. At the time of writing, XRP is trading at $2.51.