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The updated filing expands on Bitwise's earlier submission, covering custody, basket creation, and contingency plans amid XRP's regulatory uncertainty.
Key Takeaways
- Bitwise revises its XRP ETF filing, enhancing custody and trading structures.
- SEC's decision on Ripple appeal crucial for Bitwise XRP ETF's future.
Bitwise has updated its submission for launching an XRP-based ETF by revising its S-1 registration with the SEC with a new filing released today.
The latest filing refines the details of the Trust’s structure, custody arrangements, and the mechanisms for creation and redemption of shares.
This submission follows the initial S-1 form filed on October 2, which marked Bitwise’s first formal attempt to bring an XRP ETF to the US market.
The filing outlines that the XRP Custodian will mainly use cold storage for the Trust’s assets, moving limited amounts to hot storage as needed for efficient basket creations and redemptions.
The XRP Custody Agreement ensures that the Trust’s assets remain segregated from the custodian’s other holdings, enhancing the security of the private keys associated with the XRP.
To execute trades efficiently, Bitwise has appointed a Prime Execution Agent who will facilitate the purchase and sale of XRP across various trading venues, including Bitstamp, Kraken, Coinbase and LMAX, among others.
The agent’s role also extends to providing short-term financing in the form of Trade Credits, enabling timely order execution even when the Trust’s funds or XRP are not immediately available.
The Trust’s updated structure outlines the process for creating and redeeming shares in blocks of 10,000 units, referred to as Baskets. The Basket Amount, or the required XRP per Basket, will be recalculated daily to reflect accrued fees and expenses.
Bitwise acknowledges the regulatory uncertainties surrounding XRP, particularly in light of the pending SEC appeal regarding the Ripple ruling.
The firm remains transparent about potential risks, stating that if XRP is classified as a security, the Trust may be forced to liquidate its holdings under the terms of the Trust Agreement. The company has included safeguards in its updated filing to protect investors and ensure compliance with federal securities laws.
The updated filing confirms that Coinbase Global, which is affiliated with both the Prime Execution Agent and the XRP Custodian, maintains a commercial crime insurance policy covering a range of risks, including theft, fraud, and cyberattacks.
However, Bitwise clarifies that this insurance is shared across all Coinbase customers and may not be sufficient to cover all potential losses specific to the Trust.
The SEC’s decision on the Ripple ruling appeal will be a crucial determinant in shaping the Trust’s path forward and could ultimately decide the fate of the Bitwise XRP ETF launch.