Volatility Shares, a firm recognized for its innovative exchange-traded fund (ETF) offerings, has submitted filings for three distinct XRP-focused ETFs in a bid to expand investment opportunities tied to the digital asset. The proposed funds include a spot XRP ETF, a 2x leveraged XRP ETF, and an inverse -1x XRP ETF, each designed to cater to different investment strategies.
The spot XRP ETF will directly track the cryptocurrency’s price, providing investors with straightforward exposure to its market movements. Meanwhile, the 2x leveraged ETF aims to amplify XRP’s daily price changes, offering double the returns or losses of its standard performance.
On the other end of the spectrum, the inverse -1x ETF is structured for traders looking to profit from XRP’s decline, as it mirrors the asset’s daily returns in the opposite direction.
SEC Reviews XRP ETF Filings and Approval Chances
The filing by Volatility Shares adds to a growing list of asset managers seeking to launch XRP-focused ETFs in the United States, including firms like Grayscale, WisdomTree, Bitwise, 21Shares, CoinShares, and Canary Capital.
The U.S. Securities and Exchange Commission (SEC) has recently acknowledged a 19b-4 filing by the New York Stock Exchange and Grayscale for a spot XRP ETF, initiating the regulatory review process.
This filing comes at a time when market optimism surrounding regulatory approval for a spot XRP ETF is growing. Data from Polymarket suggests a 77% likelihood of approval sometime this year, though the chances of it happening before July 31 are estimated at a more cautious 35%.
About Volatility Shares, Leveraged, and Inverse ETFs
Volatility Shares is an asset management firm that specializes in developing innovative exchange-traded funds (ETFs) for institutional and individual investors.
The company focuses on creating products designed to manage and capitalize on market volatility, offering tools that enable sophisticated investment strategies.
Leveraged and inverse ETFs are specialized financial instruments that aim to deliver amplified or opposite returns relative to a specific benchmark or index.
- Leveraged ETFs: These funds seek to multiply the daily returns of an underlying index, commonly by factors of 2x or 3x. For example, a 2x leveraged ETF targeting the S&P 500 aims to achieve twice that index’s daily return. This means that if the S&P 500 rises by 1% on a given day, the ETF is designed to increase by approximately 2%. Conversely, if the index falls by 1%, the ETF would decrease by about 2%.
- Inverse ETFs: These funds are structured to deliver the opposite of the daily performance of their benchmark index. For instance, an inverse ETF linked to the NASDAQ-100 would aim to increase by 1% daily when the NASDAQ-100 declines by 1%. Inverse ETFs allow investors to profit from downward market movements without engaging in traditional short-selling practices.
Both leveraged and inverse ETFs utilize financial derivatives. While they offer the potential for significant gains, they also come with increased risk and complexity, making them more suitable for experienced investors who actively monitor their positions.
Regulatory bodies, including the U.S. Securities and Exchange Commission (SEC), have issued advisories highlighting the unique risks associated with these products, emphasizing the importance of understanding their characteristics before investing.
Quick Facts:
- Volatility Shares’ Filing proposes three XRP-focused ETFs spot, 2x leveraged, and inverse -1x.
- The filing by Volatility Shares adds to a growing list of asset managers seeking to launch XRP-focused ETFs in the United States, including firms like Grayscale.
- Volatility Shares is an asset management firm that is developing innovative ETFs like leveraged and inverse ETFs.
