- Amplify has filed with the SEC to launch a new XRP option income ETF using derivatives.
- The ETF will track XRP and generate monthly payouts through a covered call plan.
- Regulatory shifts raise approval chances for XRP-based ETFs with institutional demand.
Asset manager Amplify Investments has submitted a proposal to the U.S. Securities and Exchange Commission (SEC) for the first XRP-based “option income” exchange-traded fund. The Illinois-based firm, managing $12.6 billion in assets, intends to list the fund on the Cboe BZX Exchange. The proposed ETF, named the “Amplify XRP Monthly Option Income ETF,” is designed to track XRP’s price while generating consistent income through a covered call options strategy.
In contrast to traditional spot ETFs, which hold crypto assets, this will expose the price movements of XRP via derivatives. The product’s holdings would be composed of at least 80% XRP-linked financial instruments, like shares of XRP exchange-traded products and options written on these products.
The rest 20% would be invested in U.S. liquidity and risk management treasuries, cash, or equivalents. This approach eliminates the necessity of having XRP in hand. Other than making it easier to handle crypto assets, this reduces compliance and operational risk.
Covered Call Strategy and Investor Appeal
The filing details a covered call strategy, with options sold 5% to 10% out of the money. The options will generally mature within one week. These sales would be collected as premiums to create monthly distributions to investors. The strategy gives an income stream even when the price of XRP is stagnant.
This design combines exposure to the volatility of XRP with a conservative income element. Shareholders can enjoy a possible price increase and still get regular dividends. Market analysts observe that crypto funds using derivatives often gain more favorable attention from regulators compared with direct crypto-holding funds.
For many portfolio managers, the fund could offer a new way to diversify. Conservative investors, previously hesitant about volatility in digital assets, may find a managed income product appealing.
Over the last year, Bitcoin option income ETFs have also shown comparable growth, garnering tens of millions in assets. Is it possible for this altcoin, XRP, to benefit from faster institutional acceptance through this income-focused derivative altcoin ETF model?
Related: XRP Futures Hit $1B Open Interest Fastest in CME History
Regulatory Context and Market Implications
The filing comes as the SEC reviews over 90 crypto ETF applications, including proposals tied to XRP, Solana, Litecoin, and Dogecoin. Recent developments, such as approval for in-kind creations and redemptions in crypto ETFs, suggest regulators are increasingly open to innovative fund designs.
Analysts estimate that if a spot XRP ETF wins approval, it could attract inflows ranging between $4.3 billion and $8.4 billion. Bitcoin ETFs experienced similar surges after gaining approval, underscoring the potential scale of institutional participation. Some industry sources place a 95% chance on at least one XRP ETF receiving SEC approval in 2025.
Notably, no spot XRP ETF has yet been approved, while a model like this is more palatable to regulators. The Amplify proposal, by focusing on structured products instead of physical holdings, enhances traditional investment practices while boosting access to digital assets.
If given the green light, the Amplify XRP Option Income ETF might pave the way for more derivative-structured products targeting other altcoins. This type of product would combine controlled income strategies with digital assets investment, thus expanding the portfolio of crypto-centric financial products offered to institutional and retail investors.
