Bitwise is moving forward with its plan to launch an XRP-based ETF. They recently updated their submission to the US Securities and Exchange Commission (SEC). This update includes important changes to their S-1 registration. They’ve clarified how the trust will be structured, how assets will be stored, and how shares will be created and redeemed.
The regulatory status of XRP is still a hot topic. This uncertainty has influenced Bitwise's decision to revise their filing. One major point in the new submission is that the trust will primarily use cold storage for its XRP holdings. This method enhances security. Only a small portion will be kept in hot storage to allow for easy creation and redemption of baskets when needed.
The updated filing explains how shares can be created and redeemed in blocks of 10,000 units, known as “Baskets.” The amount of XRP needed for each Basket will be adjusted daily. This adjustment will account for any fees or expenses that have accrued.
Additionally, the XRP Custody Agreement highlights plans to keep the trust’s assets separate from the custodian’s other holdings. This separation is crucial for protecting the private keys linked to the XRP and improving overall security.
To make trading smoother, Bitwise has hired a Prime Execution Agent. This agent will manage the buying and selling of XRP on major platforms like Bitstamp, Kraken, Coinbase, and LMAX. They will also offer short-term financing, known as Trade Credits, to ensure that orders are executed promptly, even if the trust’s XRP or funds are temporarily unavailable.
Coinbase Global has a commercial crime insurance policy that covers risks like theft, fraud, and cyber-attacks. This adds another layer of security. Coinbase is linked to both the Prime Execution Agent and the XRP Custodian. However, Bitwise points out that this policy applies to all Coinbase customers, which may limit its ability to cover specific losses related to the trust.
This update builds on the initial S-1 form that Bitwise submitted on October 2. This was their first formal attempt to introduce an XRP ETF in the US. Another firm, Canary Capital, is also pursuing this financial product. There's growing interest that could overshadow a potential Solana ETF.
The update also emphasizes the ongoing regulatory uncertainties surrounding XRP. Bitwise warns that if XRP is classified as a security, the trust may have to liquidate its holdings. The outcome of the SEC’s appeal in the Ripple case will significantly impact the future of the Bitwise XRP ETF. This decision will influence whether the ETF can proceed.
In light of these uncertainties, the update introduces measures to protect investors and ensure compliance with federal securities laws. The Ripple vs. SEC case is expected to be a long legal battle, potentially stretching through July 2025.
It's worth noting that the SEC’s appeal, filed on October 2, has a deadline of October 18. If the SEC misses this deadline, the appeal could be dismissed.
While Bitwise updates its XRP ETF submission, the company is also making strides with its Bitcoin ETF. This fund has exceeded $5 billion in assets under management (AUM), showing significant growth. This milestone spans their range of investment products and highlights strong investor interest in Bitcoin.
Bitwise reports a remarkable 400% increase in AUM in 2024. They attribute this growth to both existing and new investors, especially after Luis Berruga joined as the company’s strategic advisor.
Bitwise CEO Hunter Horsley remarked, “This year, investors have trusted Bitwise to manage billions of dollars of investments in Bitcoin and crypto.”
Looking ahead, some are optimistic about Bitwise's growth. There are forecasts suggesting that their Bitcoin ETF could reach $20 billion in AUM by 2026. This comes after Bitwise achieved several key milestones in 2024, further solidifying its position in the crypto investment landscape.