In a significant move for the crypto asset management space, Grayscale Investments has filed an application with the U.S. Securities and Exchange Commission (SEC) to convert its existing XRP Trust into an exchange-traded fund (ETF). The proposed ETF would hold XRP, the native token of the Ripple network, as its sole investment and track the cryptocurrency’s price performance.
Grayscale Aims to Bring XRP to the NYSE
The Grayscale XRP Trust, which currently manages over $16 million worth of the digital asset, operates as a Delaware statutory trust. By converting it into an ETF, Grayscale seeks to provide investors with a more accessible and liquid way to gain exposure to XRP. The firm plans to list the XRP ETF on the New York Stock Exchange (NYSE) if the SEC approves the application.
An ETF structure would allow investors to buy and sell shares in the trust through their regular brokerage accounts, without having to navigate the complexities of directly holding or trading cryptocurrencies. This could potentially attract a broader range of institutional and retail investors to the XRP market.
Growing Demand for Crypto ETFs
Grayscale’s move comes amid increasing interest in cryptocurrency ETFs as a way to gain regulated, publicly-traded exposure to digital assets. While the SEC has yet to approve a spot Bitcoin ETF, it has given the green light to several futures-based Bitcoin ETFs. Grayscale itself is also seeking to convert its flagship Bitcoin Trust (GBTC) into an ETF.
The filing for an XRP ETF indicates a growing appetite among investors for diversification beyond Bitcoin and Ethereum. XRP, currently the 6th largest cryptocurrency by market cap, is used primarily for cross-border payments and has gained traction among financial institutions.
An XRP ETF would broaden the base of investors able to access the asset and potentially bolster its adoption as a tool for global payments and settlement.
– Dave LaValle, Global Head of ETFs at Grayscale Investments
Competition in the XRP ETP Space
Grayscale isn’t the only major player looking to launch an XRP investment vehicle. Asset managers such as CoinShares and Bitwise have also filed for XRP ETFs, sensing an opportunity in the market. Europe has seen several XRP exchange-traded products (ETPs) launch in recent years, though U.S. investors have had fewer regulated options to gain exposure.
The race to bring an XRP ETF to the U.S. market reflects a maturing crypto asset class and a desire among investors for more diverse, regulator-approved offerings. An approval from the SEC could open the gates for more cryptocurrency ETFs and accelerate mainstream adoption.
Ripple’s Legal Battle and XRP’s Prospects
The filing comes as Ripple Labs, the company behind XRP, continues its legal fight with the SEC. In December 2020, the SEC charged Ripple with conducting an unregistered securities offering through its sales of XRP. Ripple has vigorously denied the allegations, arguing that XRP is a currency, not a security.
Despite the ongoing legal uncertainty, XRP has maintained its position as a top ten cryptocurrency. Ripple has inked partnerships with numerous financial institutions worldwide to use XRP for cross-border payments, and the token’s trading volume has surged on decentralized exchanges.
An XRP ETF could soon be a reality under the new Trump administration, one that has promised to bring crypto innovation back to the U.S. and support locally-based businesses.
– Monica Long, President of Ripple Labs
Path Forward for Grayscale’s XRP ETF
The road ahead for Grayscale’s proposed XRP ETF remains uncertain, as the SEC has yet to approve any crypto spot ETFs. The agency has cited concerns over market manipulation and a lack of surveillance-sharing agreements between crypto exchanges and regulated markets.
However, the growing interest from established asset managers like Grayscale and the increasing maturity of crypto markets could strengthen the case for approval. The SEC will have a limited window to review Grayscale’s application and make a decision on whether to approve or deny the ETF.
If approved, the Grayscale XRP ETF would mark a significant milestone for the crypto industry and could pave the way for more digital asset investment offerings. It would provide investors with a regulated vehicle to gain exposure to XRP and potentially boost the token’s liquidity and adoption.
As the crypto landscape evolves, the launch of an XRP ETF would signal a new era of legitimacy and mainstream acceptance for digital assets. Grayscale’s filing underscores the ongoing push to bridge the gap between traditional finance and the emerging world of cryptocurrencies.
