SEC Approves Altcoin ETFs, Boosting Institutional Investment in XRP

The cryptocurrency landscape in the United States is on the verge of significant expansion with the upcoming launch of several XRP and Dogecoin (DOGE) exchange-traded funds (ETFs), indicating a growing interest from institutional investors in alternative coins. Regulatory approval from the Securities and Exchange Commission (SEC) has paved the way for these offerings, with industry players like 21Shares, Franklin Templeton, and Grayscale securing the necessary green light to list their ETFs on major exchanges. These developments come amidst increased trading activity and renewed optimism among investors.

The first breakthrough came when 21Shares received automatic SEC clearance for its XRP ETF, trading under the symbol “TOXR,” following updated guidance from the agency during a government shutdown. This ETF is designed to track the CME CF XRP-Dollar Reference Rate and will be safeguarded by Coinbase Custody Trust Company, Anchorage Digital Bank, and BitGo Trust Company, with administrative duties overseen by BNY Mellon. The approval process for this ETF was expedited compared to previous crypto ETF submissions, with a quick 20-day review period following 21Shares’ filing of Form 8-A.

Franklin Templeton also made headlines with its Franklin XRP Trust, which removed a delay provision from its S-1 filing, potentially speeding up its listing under BZX Rule 14.11(e)(4). This trust, which will hold XRP through Coinbase Custody, offers institutions a regulated way to gain exposure to XRP without direct custody risks, such as issues related to XRP Ledger forks or airdrops.

In a similar vein, the Bitwise 10 Crypto Index ETF, featuring XRP as a major holding, has been authorized by the SEC for trading on NYSE Arca. This ETF allocates a significant portion of its assets to SEC-approved cryptocurrencies, with XRP accounting for almost 5% of its holdings. The Canary Capital’s XRP ETF (XRPC) saw impressive inflows of $250 million on its first day, demonstrating strong demand for XRP-focused investment products.

Grayscale, a prominent crypto asset manager, is gearing up to launch its XRP and DOGE ETFs on the New York Stock Exchange (NYSE), converting their private trusts into publicly traded funds. These approvals from NYSE Arca expand Grayscale’s ETF offerings to include Bitcoin, Ethereum, Solana, and other altcoins, with expectations of enhancing liquidity and attracting traditional investors to the digital asset space.

Dogecoin, known as the original “memecoin,” is also gaining momentum with the introduction of Grayscale’s DOGE ETF, joining existing products from REX Shares and Osprey Funds. The anticipation surrounding the first U.S. Dogecoin ETF has fueled a nearly 6% jump in the cryptocurrency’s value, while large investors have been accumulating significant amounts of DOGE, underscoring the growing institutional interest in the asset.

The evolving approach of the SEC towards crypto ETFs has been instrumental in facilitating these developments. New guidelines now allow companies to list ETFs without direct approval if they meet stringent requirements, streamlining the process. This shift in policy has expedited the approval of XRP and DOGE ETFs, signaling the SEC’s gradual move towards more comprehensive oversight of the crypto industry.

The market response to these ETF launches has been mixed, with XRP seeing a 5% increase in value following its ETF debut, while Bitcoin ETF outflows totaling $1 billion have raised concerns about heightened volatility. Analysts warn that continued outflows could exert downward pressure on Bitcoin, potentially pushing it towards $82,000, even as altcoin ETFs continue to drive growth in the sector.

The advent of XRP and DOGE ETFs represents a significant step towards the mainstream adoption of digital assets. By offering regulated avenues for investing in altcoins, these funds could help bridge the gap between traditional finance and the crypto sphere, encouraging greater institutional participation and boosting confidence among retail investors.