Jupiter Asset Management's compliance division reverses its investment in the 21Shares Ripple XRP exchange-traded product (ETP) over regulatory issues in Ireland, resulting in a minor financial loss.
Compliance Concerns Lead to Revocation
Jupiter's internal compliance team flagged regulatory issues surrounding the Ripple XRP ETP, prompting the cancellation of the firm's initial $2 million investment. Despite the ETP's promising returns, regulatory uncertainty prompted Jupiter to liquidate its holdings, incurring a loss of $834.
Ripple XRP ETP Performance
The 21Shares Ripple XRP ETP, in which Jupiter initially invested, demonstrated a 1-year return of 31.7%. However, recent market fluctuations resulted in a 13.2% decline in value over the past six months. Jupiter's decision to revoke its investment reflects the complexities of navigating regulatory challenges in the cryptocurrency market.
Legal Dispute and Regulatory Uncertainty
The decision comes amidst ongoing discussions regarding the potential approval of an XRP exchange-traded fund (ETF). The legal dispute between Ripple and the SEC regarding XRP's classification as a security adds complexity to the regulatory landscape, casting doubt on the feasibility of an XRP ETF.
Ripple CEO's Perspective
Ripple CEO Brad Garlinghouse remains optimistic about the future of crypto ETFs following the SEC's approval of spot Bitcoin ETFs. While Garlinghouse anticipates increased adoption of crypto ETFs, including potentially an Ethereum ETF, he stops short of explicitly predicting the approval of an XRP ETF.
Conclusion
Jupiter Asset Management's decision to revoke its investment in the Ripple XRP ETP underscores the regulatory challenges faced by institutional investors in the cryptocurrency market. As regulatory uncertainty persists, navigating compliance requirements remains a key consideration for market participants.
