Feb. 15, 2025
To: Securities and Exchange Commission 100 F Street NE, Washington, DC 20549 Dear Commissioners, I am writing to express my strong support for the approval of SR-CboeBZX-2025-021, which seeks to list and trade shares of the 21Shares Core XRP Trust under BZX Rule 14.11(e)(4). The approval of this proposal would be a critical step in fostering fair market access, protecting investors, and recognizing the evolving regulatory landscape of digital assets. As the SEC has recently approved Bitcoin (BTC) and Ethereum (ETH) exchange-traded products (ETPs), denying this proposal would create regulatory inconsistency and unnecessarily limit investor access to XRP-based financial products. Below, I outline several key reasons why the SEC should approve this proposal in alignment with prior precedent, legal rulings, and investor protection principles. 1. XRP Is Not a Security, as Confirmed by Federal Court Ruling On July 13, 2023, Judge Analisa Torres ruled in SEC v. Ripple Labs (2023 WL 4507900) that XRP itself is not a security. The court explicitly stated: “XRP, as a digital token, is not in and of itself a ‘contract, transaction[,] or scheme’ that embodies the Howey requirements of an investment contract.” • This ruling directly refutes the SEC’s argument that XRP should be classified as a security. • While the court determined that certain institutional sales of XRP constituted investment contracts, it ruled that programmatic (exchange-based) sales were NOT securities. • The SEC did not successfully challenge this aspect of the ruling, and therefore, secondary market transactions of XRP should not be treated as securities. Given that ETPs do not engage in institutional sales, the SEC has no legal basis to treat an XRP-based ETP differently from Bitcoin or Ethereum ETPs. Rejecting this proposal would directly contradict a U.S. federal court ruling and undermine the principle of regulatory clarity. 2. XRP Should Be Treated as a Commodity Like Bitcoin and Ethereum The Commodity Exchange Act (CEA) defines commodities broadly, and multiple judicial and regulatory interpretations suggest that XRP aligns with this classification. • The sponsor of this ETP, 21Shares, has determined XRP meets the Commodity Exchange Act definition. • The SEC has previously approved ETPs for Bitcoin and Ethereum, which do not have explicit CFTC designations but have long been treated as commodities. • SEC Commissioner Hester Peirce and CFTC Commissioner Caroline Pham have both emphasized that certain digital assets, including XRP, should be considered commodities, not securities. If Bitcoin and Ethereum were granted ETP approvals on the basis of their commodity-like nature, XRP should be afforded the same regulatory treatment. 3. Lack of a Futures Market Should Not Be a Disqualifying Factor The SEC historically delayed Bitcoin ETFs on the grounds that Bitcoin lacked a regulated futures market of “significant size.” However, in approving Spot Bitcoin ETFs, the SEC ruled that: “Other means to prevent fraudulent and manipulative acts and practices are sufficient to justify dispensing with a surveillance-sharing agreement with a regulated market of significant size.” (Bitcoin ETF Approval Order, 2024) The same logic applies to XRP, which has strong price correlation across global exchanges and robust arbitrage mechanisms, making market manipulation unlikely. • The fragmented, high-liquidity nature of XRP markets reduces manipulation risk. • XRP’s global 24/7 trading structure ensures that no single entity can dominate price action. • If Bitcoin and Ethereum ETPs were approved despite manipulation concerns, XRP should be given the same fair opportunity. The absence of a regulated futures market should not be a barrier to ETP approval, especially given the SEC’s recent shift in policy regarding Bitcoin and Ethereum. 4. Denying This Filing Would Harm Investors & Violate the SEC’s Mandate A. Investors Need Access to a Regulated XRP Investment Product By rejecting this application, the SEC would force investors to access XRP through less secure, less transparent, and riskier venues such as unregulated offshore exchanges. • A U.S.-regulated ETP provides investor protections, including custody safeguards, transparent pricing, and regulatory oversight. • Without an XRP ETP, investors lack a safe and regulated alternative to exposure in the U.S. market. • The SEC’s mission is to protect investors, not restrict access to well-established financial products. B. Market Efficiency Would Improve with an XRP ETP Approval of this ETP would reduce inefficiencies in XRP trading, including premium/discount volatility in OTC XRP funds. • Existing XRP investment vehicles (such as private trusts) trade at significant premiums/discounts due to lack of ETF alternatives. • An XRP ETP would stabilize price discovery and reduce investor costs. • Rejecting the proposal would distort the market by denying investors a cost-effective way to invest. The SEC should not artificially disadvantage U.S. investors compared to their global counterparts, who already have access to XRP-based products in other jurisdictions. 5. XRP Is One of the Most Liquid and Widely Used Digital Assets XRP is one of the largest cryptocurrencies by market capitalization, with a fully diluted valuation exceeding $176 billion. • XRP is actively traded on regulated and non-regulated exchanges worldwide. • XRP has deep liquidity, high trading volumes, and widespread institutional adoption. • Global regulatory bodies (such as in the UK, Japan, and Singapore) have classified XRP as a non-security. The SEC’s hesitation in approving an XRP ETP contradicts international regulatory consensus and disadvantages U.S. investors. For the reasons stated above, I strongly urge the SEC to approve the listing of the 21Shares Core XRP Trust on Cboe BZX Exchange. Judge Torres’ ruling establishes XRP is not a security. XRP functions as a commodity, just like Bitcoin and Ethereum. The lack of a futures market is not a legitimate reason for rejection. Approving this ETP would protect investors and increase market efficiency. Global markets have already accepted XRP—U.S. investors should not be left behind. The SEC has an opportunity to align with judicial precedent, regulatory fairness, and investor protection goals. I respectfully request that the Commission approve this proposal in the interest of market integrity, investor protection, and financial innovation. Sincerely, Very Respectfully, Keith Sugiyama