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Bitwise Moves Closer to XRP ETF Despite Legal ‘Grey Area’
Bitwise has taken another step towards launching an XRP-based ETF, updating its submission to the US Securities and Exchange Commission (SEC). Based on the filing, the crypto index fund manager revised its S-1 registration, clarifying the structure of the trust, custody measures, and the processes for share creation and redemption.
XRP’s regulatory status remains contentious, with the uncertainty playing a role in Bitwise’s move to update its filing.
Bitwise Updates XRP ETF Filling
A key highlight of the new filing is the trust’s use of cold storage for most of its XRP holdings. This ensures enhanced security, with only a limited amount moved to hot storage to facilitate efficient basket creations and redemptions when necessary.
The updated structure of the trust details the process of creating and redeeming shares in blocks of 10,000 units, referred to as “Baskets.” The number of XRP required per Basket will be adjusted daily, accounting for any accrued fees or expenses.
Additionally, the XRP Custody Agreement emphasizes plans to keep the trust’s assets separate from the custodian’s other holdings. This segregation aims to protect the private keys associated with the XRP and enhance overall security.
To streamline trading, Bitwise has appointed a Prime Execution Agent. This agent will handle the purchase and sale of XRP across major platforms like Bitstamp, Kraken, Coinbase, and LMAX. Their role includes providing short-term financing, known as Trade Credits. These ensure the execution of orders promptly, even if the trust’s XRP or funds are temporarily unavailable.
Read more: XRP ETF Explained: What It Is and How It Works
Similarly, Coinbase Global holds a commercial crime insurance policy covering risks such as theft, fraud, and cyber-attacks. This adds to the guardrails, with Coinbase affiliated with Prime Execution Agent and the XRP Custodian. Nevertheless, Bitwise articulates that this policy stands for all Coinbase customers, thereby limiting its ability to cover specific losses related to the trust.
The revision builds on the initial S-1 form submitted on October 2, which was Bitwise’s first formal attempt to introduce an XRP ETF to the US market. Canary Capital is another firm pushing for this financial instrument, with rising interest sidestepping a possible Solana ETF.
Bitwise Trust Hinges On XRP Token Classification
The update also highlighted ongoing regulatory uncertainties surrounding XRP. Bitwise cautioned that if XRP is classified as a security, the trust may be forced to liquidate its holdings. The outcome of the SEC’s appeal in the Ripple case will significantly influence the future of the Bitwise XRP ETF.
This decision could directly impact whether the ETF moves forward. In light of this, the update introduced measures to protect investors and ensure compliance with federal securities laws. As BeInCrypto reported, the Ripple vs. SEC case is a lengthy legal battle, potentially extending through July 2025.
Of note, the SEC’s appeal, filed on October 2, faces a deadline of Friday, October 18. If the regulator misses this deadline, the appeal could be dismissed.
Read more: How To Buy XRP and Everything You Need To Know
While Bitwise updates its XRP ETF submission, the crypto index fund manager is also making strides with its Bitcoin ETF. The firm’s Bitcoin ETF has exceeded $5 billion in AUM, marking significant progress. This milestone applies across its range of beta and alpha investment products, showcasing strong investor interest and growth in its Bitcoin offerings.
Bitwise indicated that this represents a 400% surge in 2024. It ascribes the traction to existing and new investors and comes after Luis Berruga’s ascension as the company’s strategic advisor.
“This year, investors have trusted Bitwise to manage billions of dollars of investments in Bitcoin and crypto,” Bitwise CEO Hunter Horsley said.
Optimists predict even more growth for Bitwise, with some forecasting its Bitcoin ETF could reach $20 billion in AUM by 2026. This comes after the firm achieved several key milestones in 2024, further cementing its position in the crypto investment space.
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