[NEWS] Grayscale launches XRP trust, may convert to ETF

Cryptocurrency management company Grayscale announced the launch of the XRP Trust on the 12th.

It is a "closed-end" fund that offers investors direct exposure to XRP.

XRP is the native token of the blockchain network known as XRP Langer, which facilitates cross-border transactions for blockchain payments company Ripple.

Trusts and ETFs are different investment products. ETFs are sold directly to retail investors and therefore require approval from the U.S. Securities and Exchange Commission (SEC). Trust structures and sales to so-called accredited investors are less regulated.

However, with the proper regulatory approval, trusts can be converted into ETFs. Two of Grayscale's cryptocurrency mutual funds, Bitcoin (BTC) and Ethereum (ETH), were converted into ETFs with SEC approval this year.

Grayscale filed a lawsuit against the SEC last year, seeking permission to convert the Grayscale Bitcoin Trust into a physical ETF. This is credited with helping Wall Street introduce spot crypto ETFs.

Grayscale won the lawsuit, and Wall Street financial giants like BlackRock, Fidelity, and WisdomTree launched spot Bitcoin ETFs one after another.

Eleven spot Bitcoin ETFs were launched in January, and all were huge successes. 

Four months later, the SEC approved the launch of six spot ETFs tracking the underlying price of Ethereum, the world's second-largest crypto asset.

The self-described "XRP brigade" of retail investors who hold XRP have been waiting for asset managers like Grayscale and BlackRock to submit applications for XRP spot ETFs, following the launch of Bitcoin and Ethereum, and the recent Solana (SOL) spot ETF application.

Solana is the fifth-largest crypto asset by market cap. XRP is the seventh-largest crypto asset.

XRP has many retail investors who love it. What makes things uncertain with a potential XRP spot ETF is that we don't know how the SEC, Wall Street's top brass, is considering the regulatory status of XRP tokens.

The SEC has been in a long legal battle with Ripple. In 2020, the SEC sued Ripple for failing to register its sales of XRP with the SEC as a security.

Ripple wins a partial victory

Last year, a Manhattan judge handed Ripple a partial victory, ruling that Ripple's sales of XRP to institutional investors could be considered securities, but not when sold to retail investors.

The ruling sparked debate by other judges in courts across the country, and Ripple was ordered to pay a $125 million penalty for the sales by those institutional investors.

The SEC has until the first week of October to appeal the secondary market ruling, and it is said that they may appeal. 

Grayscale believes that XRP itself has long-term value for investors. That is why we believe it is worth offering to investors as an ETF. 

XRP rose 8% at one point following the announcement, exceeding 80 yen.

Reference: Gray Scale
Image: Shutterstock

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