The first leveraged XRP ETF will be introduced by Teucrium on NYSE Arca.
A unique financial instrument, the first leveraged exchange-traded fund (ETF) connected to XRP, the fourth-largest cryptocurrency by market capitalization, is about to be introduced by Teucrium Investment Advisors, an asset management company based in the United States.
According to Decrypt, investors will have a new option to have exposure to Ripple’s native coin when the Teucrium 2x Long Daily XRP ETF launches on April 8 and is listed on the NYSE Arca under the ticker “XRP.”
Structure and features of the ETF
The prospectus for the fund states that XXRP is intended to employ swap agreements to provide twice the daily performance of XRP. Since there are currently no certified spot XRP ETFs in the United States, these swaps will first be based on XRP products listed on European exchanges, such as 21Shares, Bitwise, WisdomTree, CoinShares, and Virtune.
Teucrium, a commodity-focused ETF manager with approximately $311 million in assets under management, has already introduced a Bitcoin futures ETF and is purportedly preparing a short (inverse) leveraged XRP ETF to enable traders to profit from daily drops in the price of XRP.
Risks and analyst commentary
The XXRP ETF will have a 1.85% management fee. Teucrium’s filings indicate important concerns, including as volatility and diminishing demand for XRP, which might have a negative impact on fund performance, even though the product presents enticing chances for seasoned traders looking for leveraged profits.
The launch is especially noteworthy because, for the first time in the ETF sector, there isn’t an approved spot XRP ETF in the United States. Bloomberg Senior ETF Analyst Eric Balchunas described the decision as “very odd (maybe a first),” pointing out that a leveraged fund is making its debut before a conventional spot product.
Regulatory shifts and future outlook
The years-long investigation by the U.S. Securities and Exchange Commission (SEC) against XRP’s creator, Ripple Labs, was recently concluded. In contrast to the first $125 million penalty, Ripple agreed to pay a $50 million punishment.
A number of significant asset managers, including Franklin Templeton, Bitwise, WisdomTree, and 21Shares, are currently awaiting SEC rulings on their spot XRP ETF applications. Additionally, Grayscale has applied to become a public exchange-traded fund (ETF) by converting its private Digital Large Cap Fund, which contains XRP.
In order to introduce a new XRP futures product, Coinbase Derivatives has also filed a self-certification application with the U.S. Commodity Futures Trading Commission (CFTC).
Teucrium’s audacious action might represent the beginning of a new wave of altcoin-based investment products entering conventional financial markets at a time when regulations are becoming more lenient toward cryptocurrencies.
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