On February 6, 2025, the Chicago Board Options Exchange (Cboe) submitted four separate 19b-4 filings to the U.S. Securities and Exchange Commission (SEC), seeking approval to list and trade spot XRP exchange-traded funds (ETFs) on behalf of major asset managers WisdomTree, Bitwise, 21Shares, and Canary. This move comes amid growing interest in cryptocurrency ETFs, following the successful launch of Bitcoin and Ethereum ETFs in the previous year. However, XRP’s regulatory status remains uncertain, as the SEC continues its legal battle against Ripple Labs.
These filings could be a significant development for the crypto market, potentially making XRP more accessible to institutional and retail investors. However, the path to approval is fraught with legal, regulatory, and market-based hurdles.
Background on XRP and Ripple Labs
XRP is a digital asset closely associated with Ripple Labs, a company that provides blockchain-based payment solutions. Unlike Bitcoin and Ethereum, which have been classified as commodities, XRP’s classification has been contested by the SEC.
In December 2020, the SEC sued Ripple Labs, alleging that XRP was sold as an unregistered security. In July 2023, a court ruled partially in Ripple’s favor, stating that while XRP sales to institutional investors violated securities laws, programmatic sales to retail investors did not constitute investment contracts. The SEC is currently appealing this decision, seeking to reverse the ruling regarding retail sales.
Details of the ETF Filings
The 19b-4 filings submitted by Cboe are formal proposals requesting regulatory approval to list and trade XRP ETFs. These filings initiate a review process by the SEC, which has 45 days to respond, with possible extensions up to 240 days.
Key details from the filings include:
- Legal Argument: Cboe argues that XRP is not a security, referencing the July 2023 court ruling.
- Market Integrity Measures: Asset managers propose using enhanced surveillance mechanisms to prevent market manipulation.
- Custodianship: XRP would be held in cold storage by licensed third-party custodians to ensure security.
- Liquidity and Trading Mechanisms: The ETF issuers plan to source XRP from secondary markets rather than acquiring it directly from Ripple Labs to mitigate regulatory concerns.
- Investor Protection: The filings outline mechanisms to suspend trading during high volatility and implement robust risk-management measures.
Market Context and XRP’s Price Performance
The filings come at a time of growing interest in crypto investment products. In 2024, the SEC approved the first spot Bitcoin ETFs, leading to significant institutional inflows. BlackRock’s iShares Bitcoin Trust became one of the most successful ETF launches in history, paving the way for broader crypto ETF adoption.
Despite this enthusiasm, XRP has experienced volatility. After approaching its all-time high of nearly $3.40 in late January 2025, XRP’s price has declined by approximately 25% over the past two weeks. As of February 8, 2025, XRP is trading at around $2.41, with a 24-hour trading volume of approximately $8.49 billion.
Regulatory Challenges and Considerations
The SEC’s decision on the XRP ETFs will be closely watched. Unlike Bitcoin and Ethereum, which have established futures markets on the CME, XRP lacks a regulated futures market. The SEC has historically favored ETFs backed by futures markets, making this a potential roadblock.
Additionally, the SEC’s ongoing appeal in the Ripple case adds uncertainty. If the SEC successfully reverses the retail sales ruling, it could impact the classification of XRP and influence the ETF approval process.
Asset managers are proactively addressing regulatory concerns by:
- Sourcing XRP from diverse venues to ensure market integrity.
- Conducting real-time surveillance to prevent manipulation.
- Implementing strict custodial measures to safeguard assets.
Potential Impact on the Cryptocurrency Market
If approved, the spot XRP ETFs could have far-reaching implications:
- Increased Accessibility: ETFs provide a regulated and convenient way for investors to gain exposure to XRP without holding the asset directly.
- Liquidity Boost: Institutional inflows could increase trading volume and price stability.
- Regulatory Precedent: Approval could pave the way for ETFs based on other altcoins, such as Solana and Cardano.
- Ripple’s Ecosystem Growth: Greater adoption of XRP could benefit Ripple’s payment network and partnerships.
However, there are risks:
- If the SEC denies the applications, it could signal stricter regulatory scrutiny for altcoin-based ETFs.
- Market demand for XRP ETFs is uncertain; while Bitcoin ETFs saw massive inflows, interest in Ethereum ETFs has been more modest.
Conclusion
The submission of spot XRP ETF applications by Cboe represents a major development in the cryptocurrency investment landscape. While regulatory hurdles remain, approval could further legitimize XRP and expand institutional participation in the crypto market.
With the SEC’s review process underway, investors and market participants will be closely monitoring developments. Whether these ETFs receive approval or face rejection, the outcome will shape the future of cryptocurrency-based investment products in the U.S.
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