- Agro-focused ETF issuer set to launch leveraged XRP ETF.
- The SEC hasn’t approved a spot XRP ETF.
- It’s “very odd,” says one market analyst.
XRP just got its first US-listed exchange-traded fund ― but it’s not the one market watchers were expecting.
Teucrium, a Vermont-based investment firm that specialises in “alternative ETFs,” plans to launch a leveraged ETF tied to the Ripple-linked cryptocurrency on Tuesday.
The fund is designed to offer double the daily exposure to XRP’s price swings, which can amplify gains as well as losses.
After tumbling almost 12% in the last seven days, XRP surged 6% as the markets staged broad-based rebound.
Leveraged exchange-traded funds for stock market indices have been around for years. But with investors anticipating the approval of a spot price ETF for XRP, the rollout of Teucrium’s offering raised eyebrows among some analysts.
“Very odd, maybe a first, that a new asset’s first ETF is leveraged,” Eric Balchunas, Bloomberg Intelligence’s ETF analyst, posted on X.
So why debut a turbocharged XRP ETF when the vanilla form of the product doesn’t exist yet?
The answer lies in a well-known regulatory loophole that allows issuers like Teucrium to launch synthetic, or futures instruments that are structured as commodity pools under the oversight of the Commodity Futures Trading Commission.
Such commodity pools can be used to launch exotic ETFs even if the Securities and Exchange Commission has yet to greenlight a plain spot version.
The SEC is reviewing multiple spot XRP ETF applications and has until mid-October to make a decision. Balchunas reckons that the odds of an approval are high.
Unlike a spot ETF, Teucrium’s leveraged XRP ETF won’t directly hold the underlying asset, and will likely use derivatives contracts to deliver the daily returns.
Teucrium has a significant presence in the ETF ecosystem.
But instead of equities and bonds like other ETF shops, the firm has focused on the agricultural market with a raft of funds tied to raw goods including wheat, sugar, corn, and soybeans.
Teucrium sits on over $320 million in assets under management across 11 ETFs traded in the US.
Crypto market movers
- Bitcoin is up 4% over the past 24 hours to trade at $79,546.
- Ethereum is up 6.9% over the same period to about $1,579.
What we’re reading
- Saylor’s Strategy expects net loss after $5.9bn Bitcoin drop ― DL News
- Trillions Wiped From Markets — Milk Road
- In Market Crash, What Should You Buy? Crypto VCs Are Making These Bets ― Unchained
- What You Missed This Week — Milk Road
- ZKasino’s year-long silence on investor refunds ends in a $27m liquidation ― DL News
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. Got a tip? Please contact him at osato@dlnews.com.
