After months of speculation, it looks like Ripple's XRP (XRP 0.04%) may get its first spot ETF. Bloomberg analysts predict Rex-Osprey's Dogecoin (DOGE -1.63%) and XRP ETFs will get the SEC green light on Thursday, September 18.
What investors need to know is that the REX-Osprey XRP ETF (Proposed ticker: XRPR) is structured differently from other spot crypto ETFs. This helped to fast-track the approval process, but it may not represent the best deal for investors.
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A crypto ETF, but not as we know it
As with many things in the crypto world, Bitcoin (BTC -0.88%) and Ethereum (ETH -3.91%) have led the way on the ETF front. The first spot Bitcoin ETF was approved in January 2024, followed by spot Ethereum ETFs in July. According to CoinGlass, there's now almost $180 billion in Bitcoin and Ethereum ETFs.
Due to uncertainty over how individual cryptocurrencies are classified, many of those spot ETFs are structured as Exchange-Traded Products (ETPs) under the 1933 Securities Act. The process can take up to 240 days, as the SEC reviews each one individually.
Rex Shares and Osprey Funds found a way to shortcut the process. Their proposed ETFs are regulated investment companies under the 1940 Investment Act. They are hybrid funds that will be managed via a Cayman Islands subsidiary. Approval can take 75 days.
For investors, the structure can impact fees, taxes, and what investments are held. For example, XRPR would charge a 0.75% management fee. For comparison, the iShares Bitcoin Trust (IBIT 1.65%) charges just 0.25%. According to its filing documents, XRPR would hold 20% in cash and cash alternatives. Another 40% of the holdings would be in other XRP ETFs -- including some in other countries and potentially also non-spot ETFs.
There are other XRP ETFs in the pipeline
According to The Block, there are seven spot XRP ETFs awaiting SEC approval. With decisions due in October or November, it may make sense to wait.That would give investors the chance to compare fees, dig into what each ETF offers, and pick the right one for their portfolio.
