- XRP ETF could debut in Canada as Purpose Investments submitted a prospectus with Canadian regulators, proposing to launch a spot XRP ETF.
- Purpose Investments aims to be the first firm to launch an XRP ETF while its US counterparts await acknowledgment from the SEC.
- XRP could find support near $2.62 if it breaks the lower boundary line of a descending channel.
XRP is down 3% on Saturday as asset manager Purpose Investments submitted a prospectus with Canada securities regulators to launch a Ripple (XRP) exchange-traded fund (ETF). The firm seeks to beat US companies — as the US Securities & Exchange Commission (SEC) is yet to respond to their filings — to launch the world’s first spot XRP ETF.
XRP ETF receives traction as Canadian firm seeks to get ahead of US issuers
Canadian asset manager Purpose Investments has submitted a preliminary prospectus to Canada securities regulators for the proposed launch of a Purpose Ripple (XRP) ETF.
The firm stated that the Purpose Ripple ETF is designed to allocate the majority of its assets to long-term holdings of XRP to offer its holders the potential for sustained capital appreciation.
Purpose claims to be the first to introduce spot Bitcoin and Ethereum ETFs, which commenced trading on the Toronto Stock Exchange in February and April 2021, respectively.
The firm now seeks to build on its success by launching the world’s first spot XRP ETF, according to a statement released on Thursday. Although XRP exchange-traded products (ETPs) already exist in other European countries.
“As XRP sees increasing adoption and institutional interest, we believe an ETF can offer investors a transparent and familiar way to access it within a regulated framework,” said Som Seif, founder and CEO of Purpose Investments.
Purpose Investments’ XRP ETF intentions follow that of US issuers, who await the Securities & Exchange Commission’s (SEC) response on their XRP ETF filings.
Although US-based firms were the first to file, Canada’s regulatory framework typically allows for faster ETF approvals than their US counterpart, especially that of cryptocurrency ETFs. Hence, the Purpose XRP ETF could debut before that of US issuers.
Five US asset managers, including Grayscale, Bitwise, Canary Capital, WisdomTree and 21Shares, have all filed for an XRP ETF with the SEC.
Additionally, Polymarket data revealed that the odds for an XRP ETF approval in the US increased to 82%, signaling heightened expectation for the SEC to begin acknowledging the filings.
XRP could find support near $2.62 if it declines below descending channel
XRP continued consolidating on Friday, with its price slightly tilted toward the downside. The remittance-based token is following a developing descending channel extending from January 15.
XRP/USDT 4-hour chart
If XRP fails to hold the channel’s lower boundary line, it could find support near $2.62. However, if XRP sustains a move above the channel’s upper boundary line and holds it as a support, it could rally to test its all-time high resistance at $3.55.
The Relative Strength Index (RSI) and Stochastic Oscillator (Stoch) are below their neutral levels, indicating dominant bearish momentum.
A daily candlestick close below $2.33 will invalidate the thesis.
SEC vs Ripple lawsuit FAQs
It depends on the transaction, according to a court ruling released on July 14, 2023: For institutional investors or over-the-counter sales, XRP is a security. For retail investors who bought the token via programmatic sales on exchanges, on-demand liquidity services and other platforms, XRP is not a security.
The United States Securities & Exchange Commission (SEC) accused Ripple and its executives of raising more than $1.3 billion through an unregistered asset offering of the XRP token. While the judge ruled that programmatic sales aren’t considered securities, sales of XRP tokens to institutional investors are indeed investment contracts. In this last case, Ripple did breach the US securities law and had to pay a $125 million civil fine.
The ruling offers a partial win for both Ripple and the SEC, depending on what one looks at. Ripple gets a big win over the fact that programmatic sales aren’t considered securities, and this could bode well for the broader crypto sector as most of the assets eyed by the SEC’s crackdown are handled by decentralized entities that sold their tokens mostly to retail investors via exchange platforms, experts say. Still, the ruling doesn’t help much to answer the key question of what makes a digital asset a security, so it isn’t clear yet if this lawsuit will set precedent for other open cases that affect dozens of digital assets. Topics such as which is the right degree of decentralization to avoid the “security” label or where to draw the line between institutional and programmatic sales persist.
The SEC has stepped up its enforcement actions toward the blockchain and digital assets industry, filing charges against platforms such as Coinbase or Binance for allegedly violating the US Securities law. The SEC claims that the majority of crypto assets are securities and thus subject to strict regulation. While defendants can use parts of Ripple’s ruling in their favor, the SEC can also find reasons in it to keep its current strategy of regulation by enforcement.
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