XRP ETF Approval Signals New Liquidity

What to Know:

• 21Shares has launched an XRP exchange-traded fund (ETF) under the ticker TOXR, signaling growing institutional interest in XRP exposure.
• TOXR’s listing on CBOE with a competitive 0.30% fee introduces a new option for investors, challenging existing products like XRPC by Canary.
• Despite the ETF structure, investors should note that TOXR is structured as a trust, meaning holders gain exposure to XRP’s price but not to rights associated with owning the token directly.

The launch of 21Shares’ XRP ETF (TOXR) marks a notable development in the digital asset space, providing a new avenue for institutional and high-net-worth investors to gain exposure to XRP. This move comes amid evolving regulatory landscapes and increasing demand for diversified crypto investment vehicles. The introduction of TOXR could potentially impact XRP’s liquidity and price discovery, warranting a closer look at its structure, fees, and market positioning.

ETF Fee Structure and Market Competition

TOXR’s competitive fee of 0.30% positions it favorably against existing XRP-focused investment products such as XRPC by Canary, which charges 0.5%. This lower fee could attract investors seeking cost-effective exposure to XRP, potentially leading to a shift in market share. Franklin Templeton’s XRPZ is the only cheaper option. The fee structure of crypto ETFs plays a crucial role in attracting capital, particularly from institutional investors who are highly sensitive to expense ratios.

21Shares’ Existing XRP Track Record

21Shares already manages AXRP in Europe, an ETP launched in 2019 with $573,68 million in AUM and long-term performance of 459.81% since inception, even after recent one-month and three-month drawdowns. This existing product demonstrates the firm’s commitment to the XRP ecosystem and its ability to manage XRP-related investment vehicles. The performance of AXRP provides a benchmark for TOXR, offering insights into potential investor returns and risk management strategies.

Trust Structure and Investor Rights

TOXR is structured as a trust, which means that holders gain exposure to XRP’s price but not to rights associated with owning the token directly. This distinction is important for investors to understand, as it affects their rights and responsibilities related to the underlying asset. Unlike ETFs regulated under the 1940 Act, TOXR does not provide holders with the same level of regulatory protection and direct ownership benefits.

XRP’s Fundamental Value Proposition

The case for XRP within the ETF framework rests on several key fundamentals, including the strong community support from the “XRP Army,” the XRP Ledger’s long-standing operation as a public blockchain for business use since 2012, its real-world adoption in payments, tokenization, and DeFi, and its position as the fourth-largest cryptocurrency by market capitalization. These factors contribute to XRP’s perceived value and potential for long-term growth. However, investors should carefully assess these factors and conduct their own due diligence before investing in TOXR.

Regulatory Considerations and Risk Assessment

21Shares has emphasized in its disclosure that TOXR carries high risk levels and may not be suitable for all investors. This caution reflects the inherent volatility and regulatory uncertainty associated with cryptocurrencies. Investors should carefully consider their risk tolerance and investment objectives before allocating capital to TOXR. The regulatory landscape for digital assets is constantly evolving, and changes in regulations could impact the value and viability of XRP and TOXR.

The launch of 21Shares’ XRP ETF represents a significant step in the evolution of crypto investment products, providing institutional investors with a new way to access XRP. While the ETF’s competitive fee structure and 21Shares’ existing track record are encouraging, investors should carefully consider the trust structure, regulatory risks, and XRP’s fundamental value proposition before investing. As with any investment in the digital asset space, thorough due diligence and a clear understanding of the risks involved are essential.

Related: XRP Negative Funding Signals Potential Buy

Source: Original article