- Teucrium launches first U.S. leveraged XRP ETF after SEC approval.
- XXRP ETF offers 2x daily XRP exposure using swap agreements.
- No spot XRP ETFs yet, but leveraged product signals shifting regulatory stance.
The United States Securities and Exchange Commission has granted Teucrium Investment Advisors approval for the launch of the country’s first ever leveraged exchange-traded fund tied to the price of XRP. The new product, the Teucrium 2x Long Daily XRP ETF, will begin trading on Tuesday, April 8, under the symbol XXRP on NYSE Arca.
The ETF uses derivatives contracts, such as total return swaps, that will provide twice the daily performance of XRP’s price. Its primary objective is to provide amplified exposure to cryptocurrency price movements both upward and downward, to short-term traders. According to its regulatory filing, the product will have a management fee of 1.85 percent.
Wall Street Sees its First Leveraged Altcoin ETF Amid XRP Clarity
This launch follows a $50 million settlement in March between Ripple Labs and the SEC, resolving a long-running legal dispute over XRP classification. The conclusion of the case removed a major regulatory overhang for the cryptocurrency and appears to have paved the way for new investment vehicles based on its price.
The timing of the ETF approval also puts XRP in a great spot. Typically, in the U.S. market, spot ETFs generally precede leveraged versions. However, to date, no spot XRP ETFs have yet been approved. But Teucrium is providing synthetic exposure to XRP through a structure involving daily resets and swap contracts. The swaps will reference indices ranging from the CME CF XRP-Dollar Reference Rate, prices from a group of XRP-linked exchange-traded products listed in Europe, including those from 21Shares, CoinShares, WisdomTree, and Bitwise.
Eric Balchunas, Bloomberg ETF analyst, pointed out the unusual nature of this launch, stating that leveraged ETFs are rarely the first type of product to be approved for a particular asset. He also noted the potential implications for future XRP-related funds, considering the current interest from major asset managers. Companies including Grayscale, Franklin Templeton, and 21Shares have each filed for a spot XRP ETF, which are still under review.
Teucrium Plans Short XRP ETF as Crypto-based Products Expand
Based in Vermont, Teucrium has nearly $300 million in assets, and has the requisite experience in structuring cryptocurrency-linked ETFs. Previously, the firm had launched a Bitcoin futures ETF under the Securities Act of 1933 in 2022. Teucrium adds to a growing list of firms bringing derivatives based exposure to crypto assets through its XRP product amidst ongoing regulatory caution around spot products.
Additionally, the company is also planning to offer a 2x Short Daily XRP ETF, which would generate twice the inverse of XRP daily return. As a result, traders would be able to bet on declines in XRP’s price using a similar derivatives-based structure. Both products are designed to be used on a daily basis and have a high level of volatility given that their returns are leveraged.
With no spot market available for an XRP ETF in the US, these leveraged funds will act as the primary way for institutional and retail investors alike to gain regulated exposure to the asset without directly holding it. Most spot filings are still under SEC review, and so far only a certain number of crypto based ETF’s have been approved, mostly for Bitcoin and Ethereum futures.
