Spot or Not? What the REX-Osprey XRP ETF Really Holds

As the Rex-Osprey XRP ETF launches today in the U.S., speculation is mounting over whether the fund qualifies as an actual spot-based ETF. 

Multiple reports indicate that XRP could welcome its first-ever spot exchange-traded fund in the United States today. Notably, Rex Shares and Osprey Funds are the asset managers behind the XRP ETF.

REX-Osprey XRP ETF

Dubbed the REX-Osprey XRP ETF, the product aims to provide investors with regulated exposure to XRP’s price performance, easing the hurdles of direct ownership.

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Unlike most crypto ETFs—particularly spot products—Rex Osprey filed its XRP ETF under the Investment Company Act of 1940, which permits a fund to launch automatically 75 days after filing unless the SEC objects.

Since the SEC did not raise any concerns within the 75-day window, the REX-Osprey XRP ETF is eligible to launch as early as today.

However, Bloomberg analyst James Seyffart has suggested that the product is more likely to debut next week, noting that both the DOGE and XRP ETFs “will be launching next week and not [today].”

Additionally, in an earlier tweet, REX Shares clarified that its Dogecoin ETF ($DOJE) will be the first to launch, with other ETFs, including the XRP fund, following in subsequent weeks.

A Partial Spot ETF?

Meanwhile, the potential launch of the XRP ETF has elicited heated debate. Several community members have questioned whether the ETF is a spot or a futures product.

These concerns emerged due to Rex Osprey’s decision to apply for the XRP ETF under the Investment Company Act of 1940, rather than the Securities Act of 1933.

For context, the 1940 Act has enabled the launch of several futures-based crypto ETFs, such as the Teucrium 2x XRP ETF. Meanwhile, issuers pursuing spot crypto ETFs have typically filed under the 1933 Act.

Reacting to the debate, popular XRP community figure Eri suggested that the REX-Osprey XRP ETF could be viewed as a partial spot product. She claimed that at least 80% of the ETF’s assets will be directly invested in the underlying token, XRP—providing investors with actual spot exposure to its performance.

In addition, she pointed out that up to 25% of the fund’s assets will be invested through a Cayman Islands subsidiary, referred to as REX-Osprey XRP Portfolio S.P. According to her, this structure is part of efforts to comply with U.S. tax rules governing regulated investment companies (RICs).

Notably, she said the remaining allocation would be spread across money market funds, U.S. Treasuries, cash equivalents, XRP futures/swaps, and Bitcoin/Ethereum ETFs.

While the fund would indeed hold XRP directly at its core, the use of subsidiaries, derivatives, and supplemental assets continues to raise questions.

Investors Anticipate SEC Decision Next Month

Meanwhile, investors are focused on the SEC’s upcoming decision on spot ETFs from Bitwise, Grayscale, 21Shares, and eight other issuers.

The SEC’s final decision on some of these applications is expected by mid-October. Speculation suggests that the SEC would approve at least one of these spot XRP ETFs for launch. In particular, Polymarket bettors have placed the odds of approval at 93%.