Regulators Bypass Obstacles with XRP ETF Innovation

The recent developments in the cryptocurrency exchange-traded fund (ETF) space have sparked significant interest among investors and market participants, particularly concerning XRP. REX Shares and Osprey Funds are preparing to launch their XRP ETF, which is expected to be one of the first to list in the U.S. under the 1940 Investment Company Act structure. This ETF, with a proposed ticker symbol of XRPR, is anticipated to launch on September 18, and will allocate 80% of its holdings to XRP. However, this ETF is structured differently from traditional spot crypto ETFs, as it will hold 20% in cash and cash alternatives, and 40% in other XRP ETFs, including non-spot ETFs.

The regulatory landscape remains a key factor in the approval of XRP ETFs. The U.S. Securities and Exchange Commission (SEC) has historically been cautious, particularly with regard to ETFs based on individual cryptocurrencies. James Seyffart, a Bloomberg ETF analyst, noted that the approval process for XRP ETFs is complicated by the lack of a regulated futures market for the asset. While the approval of Bitcoin and Ethereum ETFs was facilitated by their ties to regulated futures markets, XRP and other altcoins face a more uncertain path.

The REX-Osprey XRP ETF is designed to meet the regulatory requirements of the 1940 Act, which has proven to be a faster and more straightforward approval route compared to the 1933 Act. This approach enables the fund to function as an open-end investment company, allowing for quicker market entry. According to Seyffart, this structure could enable the ETF to launch within 75 days of filing, provided the SEC does not raise any objections. However, the fund’s 0.75% management fee is higher than that of other spot ETFs, such as the iShares Bitcoin Trust, which charges 0.25%.

The XRP ETF is part of a broader wave of cryptocurrency ETFs that are gaining traction in the U.S. market. As of August 2025, there are 92 crypto ETPs in the pipeline, and the REX-Osprey ETFs are among the first to use the 1940 Act structure. This approach is seen as a response to the regulatory uncertainties surrounding spot ETFs and is expected to provide a more stable and transparent framework for investors. Additionally, the SEC has delayed decisions on several competing applications, including those from Franklin Templeton, BlackRock, and Fidelity, which highlights the ongoing challenges in the approval process.

The launch of the XRP ETF is anticipated to have a significant impact on the market, as it provides retail and institutional investors with a regulated and liquid investment vehicle for XRP. This could lead to increased demand for the asset and potentially influence its price dynamics. The structure of the ETF, which includes a mix of direct holdings, cash, and other ETFs, is designed to balance exposure and risk. However, investors should be aware of the potential for market manipulation and compliance issues, which remain significant concerns in the crypto space.

In conclusion, the REX-Osprey XRP ETF represents a pivotal development in the cryptocurrency ETF market, offering a new avenue for investors to access XRP through a regulated investment vehicle. While the regulatory landscape remains complex, the 1940 Act structure provides a viable path for quicker market entry and greater transparency. As the SEC continues to evaluate various ETF structures, the approval of the XRP ETF could signal a broader acceptance of cryptocurrency-based investment products in the U.S. market.