U.S. Moves Toward Launching First XRP ETF Amid Spot ETF Debate

The anticipated debut of the United States’ first XRP Exchange-Traded Fund (ETF) is creating waves in the cryptocurrency and financial sectors. Designed as the "REX-Osprey XRP ETF" and jointly managed by REX Shares and Osprey Funds, this product is tentatively scheduled to begin trading on October 13. The Crypto Basic reported on October 12 that the ETF might not fully classify as a true "spot ETF," igniting conversations across the industry.

Automatic approval for the REX-Osprey XRP ETF came under the Investment Company Act of 1940, which allows funds to move forward without intervention unless the U.S. Securities and Exchange Commission (SEC) objects within a 75-day review window. This window has passed with no resistance from the SEC. However, Bloomberg ETF analyst James Seyffart noted, “The XRP ETF and the Dogecoin ETF are expected to launch next week, not this week.”

It’s worth mentioning that REX Shares previously clarified that the Dogecoin ETF ($DOJE) would roll out first, followed sequentially by the XRP ETF.

XRP ETF Classification Debated by Industry Experts

The financial community remains split on whether the REX-Osprey XRP ETF fits the definition of a spot ETF. While its approval under the Investment Company Act of 1940 has raised eyebrows, most spot ETF applications typically rely on the Securities Act of 1933. Historically, products approved under the 1940 Act have primarily been limited to futures-backed funds, which weeds out true spot ETFs.

Eri, a prominent XRP advocate, has offered a counterargument, claiming that up to 80% of the fund will invest directly in physical XRP assets. This structure, blending direct XRP holdings, derivatives, subsidiaries, and other crypto ETF components, leads her to describe the ETF as a partial spot ETF. Industry observers are closely watching how this unique framework plays out and whether it influences the broader spot ETF categorization debate.

Spot ETF Decision Looms Across Broader Cryptocurrency Sector

The launch of the XRP ETF coincides with heightened expectations surrounding the approval of other cryptocurrency-based ETFs. Nine notable firms, including Bitwise, Grayscale, and 21Shares, are eagerly awaiting the SEC’s final rulings on their respective spot ETF applications. These decisions are expected by mid-October, sparking intense speculation within the market.

There is growing optimism that at least one ETF application may receive the green light. Forecasting platform Polymarket currently places the likelihood of an XRP ETF approval at an impressive 93%, underscoring widespread industry confidence in regulatory progress.

Institutional Investor Interest and Market Implications

Institutional appetite for crypto ETFs has surged amid discussions of regulatory approval and mainstream market adoption. Specifically, the XRP market has witnessed heightened call option activity throughout the week, indicating bullish sentiment among participants. Experts believe that the introduction of crypto-related ETFs, including partial spot products like the REX-Osprey XRP ETF, could profoundly impact adoption rates, trading dynamics, and cryptocurrency valuation trends.

As the story unfolds, the potential integration of these ETFs into conventional financial systems could herald new growth opportunities for digital assets. Industry participants and analysts alike are closely monitoring these developments, as they may set precedents for future crypto ETF structures and regulatory decisions.

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