- ProShares will introduce 3 XRP futures ETFs offering leveraged and inverse exposure.
- The SEC has not yet approved spot XRP ETFs, though Grayscale’s decision is expected in May.
- Strong investor demand for XRP futures ETFs hints at growing interest in crypto assets.
The U.S. Securities and Exchange Commission (SEC) has approved ProShares Trust to launch three XRP futures-based exchange-traded funds (ETFs). According to regulatory filings, the products, Ultra XRP, Short XRP, and Ultra Short XRP, are scheduled to begin trading on April 30. However, while futures ETFs have gained clearance, the SEC has not yet approved any spot XRP ETFs despite multiple pending applications. Grayscale’s spot XRP ETF submission remains under review, with a final decision expected by May 22.
ProShares’ new ETFs aim to provide investors with various exposure strategies to XRP’s price movements through regulated futures contracts. Significantly, the funds would not involve direct XRP ownership but track the cryptocurrency’s price instead through the XRP Index methodology. The ETFs will operate under a mutual fund framework, complying with both the Securities Act and the Investment Company Act.
ProShares Introduces Leveraged and Inverse XRP Investment Options
Briefing about the products, the Ultra XRP ETF seeks to deliver twice the daily return of XRP futures, offering 2x leverage to investors targeting amplified gains, while the Short XRP ETF is designed to offer inverse exposure, enabling investors to benefit from daily price declines in XRP futures contracts. Considering Ultra Short XRP ETF, it aims to deliver approximately twice the inverse daily performance of XRP futures trading outcomes.
Besides leveraging futures contracts, ProShares structures these ETFs to comply with strict financial regulations, maintaining transparency and investor protection. ProShare Advisors LLC, headquartered in Bethesda, Maryland, serves as the investment advisor, while legal services are provided by Dechert LLP, based in New York. Additionally, Richard Morris of ProShare Advisors takes charge as the agent for service in the official filings.
Consequently, ProShares’ move reflects a strategic expansion into products investing in digital assets in light of major institutional interest in cryptocurrency markets. This approach aligns with an industry trend favouring regulated financial instruments as an alternative exposure to major cryptocurrencies. Investors now see ETFs as trading opportunities to gain trading advantages without the direct custody of the involved cryptocurrency.
Related: https://cryptotale.org/dogecoin-xrp-etfs-under-sec-review-a-shift-in-stance/
XRP Futures Gaining Momentum Despite Spot ETF Delays
ProShares’ XRP ETF approval comes shortly after Teucrium Investment Advisors launched the first 2x XRP futures ETF in early April. According to Teucrium, its initial offering generated over $5 million in trade volume on its first day, signaling strong market demand. Significantly, this performance made the 2x XRP ETF the most successful product launch in the firm’s history.
However, spot XRP ETFs remain under SEC review alongside other pending applications for Solana, Litecoin, and Dogecoin-based ETFs. Moreover, analysts express caution that recent legal victories for Ripple Labs could influence more favorable regulatory outcomes for XRP products. Changes in SEC leadership have further fueled expectations that broader cryptocurrency adoption in financial markets could accelerate.
Considering the situation, Eric Balchunas, a senior ETF analyst, stated that it was very odd (maybe a first) that a new asset’s first ETF is leveraged. Further, it is unusual that futures ETFs gain approval ahead of spot ETFs, reversing the typical regulatory sequence. Thus, the launch of the ProShares XRP leveraged varieties highlights the growing prospects and persistent regulatory challenges in crypto investments.
