A new investment product is set to serve as a crucial barometer for investor demand in one of the cryptocurrency market’s most prominent yet contentious assets: XRP. The upcoming launch of the REX Osprey XRP Trust (XRPR) will provide the first significant test of whether traditional finance investors are eager for direct exposure to the Ripple-affiliated token through an exchange-traded structure.
While not the spot ETF that many investors are eagerly awaiting, this new fund represents a critical step toward that future. As noted by Nate Geraci, President of the ETF Institute, on social media platform X (formerly Twitter), the product will act as a “good litmus test” for XRP’s appeal in the regulated investment world. This is especially relevant given that futures-based Bitcoin ETFs, as tracked by major financial data providers like Bloomberg, have already amassed over $1 billion in assets, demonstrating a clear institutional appetite for crypto derivatives.
A Different Kind of Crypto Fund
It is essential to understand that the REX Osprey XRP Trust is not a traditional ’33 Act spot ETF, like the wildly successful Bitcoin ETFs from giants like BlackRock and Fidelity. Instead, it operates under the Investment Company Act of 1940 (’40 Act). This structure, similar to the Grayscale Bitcoin Trust (GBTC) before its conversion, does not require explicit approval from the U.S. Securities and Exchange Commission (SEC) to begin trading.
The fund’s objective is straightforward: roughly 80% of its assets will be allocated to XRP itself or other instruments that provide exposure to the token. This direct holding structure differentiates it from a futures-based ETF and offers a purer play on the asset’s price movements.
The Billion-Dollar Question: Will Investors Bite?
The central question remains one of demand. The landscape for an XRP ETF is complex. On one hand, major asset managers have shown interest. Bitwise, a leading crypto index fund manager, filed to launch a spot XRP ETF back in October 2023. They were followed by other prominent firms, including Franklin Templeton, which recently filed for a spot Ethereum ETF.
However, a significant cause for skepticism is the notable absence of the industry’s two largest players: BlackRock and Fidelity. Both firms have launched spot Bitcoin ETFs and have filed for spot Ethereum ETFs, yet neither has shown public interest in an XRP product. This hesitation is likely tied to the regulatory cloud that has hung over XRP since the SEC’s lawsuit against Ripple, alleging the token was an unregistered security. Although a court ruling last year found that XRP is not in itself a security when sold to the public on exchanges, the legal ambiguity persists.
The performance of this new REX Osprey Trust will be closely watched by the entire digital asset industry. Strong inflows could signal robust demand and pressure regulators and larger issuers to move forward with more robust ’33 Act spot ETFs. Tepid interest, however, could confirm that without absolute regulatory clarity and backing from the largest ETF issuers, XRP may remain a primarily retail-driven asset for the foreseeable future.
