TLDR
- 21Shares XRP ETF to be listed under the TOXR ticker on Cboe BZX Exchange.
- The approval allows investors indirect exposure to XRP via traditional brokerage accounts.
- 21Shares XRP ETF is a passive fund aiming to track XRP’s price.
- XRP to be held by trusted custodians including Coinbase and BitGo for the ETF.
21Shares US LLC has successfully secured approval for its 21Shares XRP ETF to be listed on the Cboe BZX Exchange under the ticker “TOXR.” This approval marks a significant milestone for the company, allowing the ETF to begin trading on the exchange. The ETF is designed to offer investors indirect exposure to XRP, a popular digital asset, through a regulated financial instrument. The move is part of a growing trend of cryptocurrency-related products being offered on traditional financial exchanges, providing investors an alternative to directly holding digital assets like XRP.
The listing of the 21Shares XRP ETF on Cboe BZX is expected to open up new avenues for investors seeking a more familiar method of exposure to XRP. The ETF will track the performance of XRP through the CME CF XRP—Dollar Reference Rate—New York Variant (XRPUSD_NY), a benchmark specifically designed to measure XRP’s price movements in U.S. dollars. As a passive investment vehicle, the ETF will not engage in speculative trading or leverage, focusing solely on mirroring the price movements of XRP, minus the trust’s expenses.
ETF Structure and Custody Arrangements
The 21Shares XRP ETF is structured as a Delaware statutory trust. The Trust will hold XRP, with its shares designed to track the price of the asset as measured by the Pricing Benchmark. In addition, the Trust’s assets will be held by leading custodians in the cryptocurrency space, including Coinbase Custody Trust Company, Anchorage Digital Bank N.A., and BitGo Trust Company. These custodians are responsible for the safekeeping of XRP, using advanced security measures such as cold storage to protect the assets.
The structure of the ETF allows Authorized Participants (APs) to create or redeem shares in baskets, with each basket being based on a specific amount of XRP. APs can execute these transactions in-kind by delivering XRP to the Trust in exchange for shares or redeeming shares for XRP. Cash redemptions are also permitted, though any associated transaction costs will be the responsibility of the AP. This flexibility offers liquidity in the trading of the ETF shares, which are expected to be actively traded on the Cboe BZX Exchange under the ticker “TOXR.”
Strategic Impact on XRP’s Market Access
By listing the 21Shares XRP ETF on Cboe, 21Shares US LLC provides investors with a more regulated and accessible way to gain exposure to XRP without the complexities of managing digital wallets or trading on cryptocurrency exchanges. The ETF represents an efficient way for traditional investors to gain indirect exposure to the price movements of XRP through familiar brokerage accounts.
Additionally, the move may potentially attract institutional investors who have been cautious about investing in digital assets directly due to concerns around security, custody, and regulation. The approval of this ETF could encourage more widespread institutional adoption of digital asset-based financial products. Investors will also benefit from the transparency of pricing, as the Trust’s shares will be continuously valued based on the Pricing Benchmark, providing regular updates on the net asset value (NAV) of the fund.
Risk Considerations for Investors
Despite its potential benefits, the 21Shares XRP ETF involves certain risks associated with the volatility of XRP. XRP’s price is known for its significant fluctuations, and the ETF’s value will directly correlate to the price of the digital asset. Investors should consider the possibility of price volatility in the market for XRP, which could lead to both potential gains and losses. Furthermore, the ETF does not offer exposure to any staking rewards or other income opportunities that might arise from holding XRP directly.
Additionally, investors should be aware that the regulatory landscape for digital assets like XRP is still evolving. The status of XRP under U.S. securities law remains uncertain, and changes in the regulatory environment could affect the performance and operation of the Trust. Therefore, potential investors should carefully consider the regulatory and market risks associated with investing in the 21Shares XRP ETF.
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