Bitwise Enhances XRP ETF Filing with Focus on Custody and Trading Structures
Key Highlights
- Bitwise updates its XRP ETF filing, emphasizing improved custody and trading mechanisms.
- SEC’s forthcoming decision on Ripple appeal pivotal for Bitwise XRP ETF’s future.
Bitwise has recently adjusted its application for launching an XRP-based ETF by amending its S-1 registration with the SEC through a revised filing published today.
The updated submission provides finer details on the Trust’s framework, custody setups, and processes for share creation and redemption.
This revision comes after Bitwise’s initial S-1 submission on October 2, which signaled the company’s debut effort to introduce an XRP ETF to the US market.
The filing specifies that the XRP Custodian will predominantly utilize cold storage for the Trust’s assets, transferring limited amounts to hot storage as necessary for efficient basket formations and redemptions.
The XRP Custody Agreement guarantees the isolation of the Trust’s assets from the custodian’s other holdings, heightening the security of the XRP’s associated private keys.
For seamless trading execution, Bitwise has designated a Prime Execution Agent to facilitate XRP purchases and sales across various trading platforms like Bitstamp, Kraken, Coinbase, and LMAX, among others.
The agent’s responsibilities extend to providing short-term funding in the form of Trade Credits, enabling prompt order execution even in scenarios where the Trust’s funds or XRP are not readily available.
The Trust’s updated framework delineates the process for creating and redeeming shares in increments of 10,000 units known as Baskets. The Basket Amount, representing the requisite XRP per Basket, will be recalibrated daily to account for accrued fees and expenses.
Bitwise acknowledges the regulatory uncertainties surrounding XRP, particularly in light of the pending SEC appeal concerning the Ripple ruling.
The company maintains transparency regarding potential risks, noting that if XRP is categorized as a security, the Trust may be compelled to liquidate its holdings pursuant to the Trust Agreement terms. The firm has integrated safeguards in its updated filing to safeguard investors and ensure compliance with federal securities regulations.
The revised filing confirms that Coinbase Global, linked to both the Prime Execution Agent and the XRP Custodian, upholds a commercial crime insurance policy covering various risks such as theft, fraud, and cyberattacks.
Nevertheless, Bitwise clarifies that this insurance is distributed among all Coinbase clients and may not suffice to cover all potential losses specific to the Trust.
The SEC’s forthcoming ruling on the Ripple appeal will be a decisive factor in shaping the Trust’s trajectory and could ultimately determine the fate of the Bitwise XRP ETF launch.