Grayscale Investments relaunches its XRP Trust in a move that drove the cryptocurrency’s price up by 10% and that could pave the way for a new crypto exchange-traded trust.
The digital asset manager shuttered its trust in 2021 during crypto company Ripple’s fight with US regulators. Ripple’s founders developed XRP.
“Grayscale’s relaunch of an XRP trust is noteworthy, as it could pave the way for an XRP ETF,” Presto Research wrote in a note to investors on Friday. “While trusts face lighter regulatory scrutiny, an ETF would require SEC approval, potentially broadening access to the public.”
The approval of 11 spot Bitcoin ETFs catapulted the crypto market into record heights at the beginning of the year. The funds run by the likes of Wall Street giants BlackRock and Franklin Templeton have seen over $17 billion in inflows since January, according to data from SoSoValue.
In July, the success was followed by the launch of spot Ethereum ETFs, which experts estimated will see $15 billion in inflows by the end of 2025.
Since then, people have been wondering which cryptocurrency will be next to get devoted ETFs. Solana has come out as one candidate, but Grayscale’s relaunch puts XRP back in the race.
Relaunch
Presto Research analysts Peter Chung and Min Jung argued that the relaunch is significant. Grayscale decision to convert its Bitcoin trust into an ETF — and its subsequent court fight with the Securities and Exchange Commission to be allowed to do so — led to the launch of spot Bitcoin ETFs in the US, they noted.
“What could further increase the odds of an XRP ETF listing is if CME were to list XRP futures,” Chung and Jung wrote.
There’s no such indication yet, but crypto derivatives exchange Bitnomial applied to the Commodity Futures Trading Commission agency in August to add XRP futures to its offerings.
If the CFTC greenlights it, then the CME may follow suit, the Presto Research analysts wrote.
The absence of a futures market is a roadblock that will prevent the launch of Solana ETFs, Sui Chung, CEO of Kraken-owned index provider CF Benchmarks, told DL News earlier this month.
Court fight
Grayscale’s XRP relaunch comes on the back of Ripple’s long-running legal battle with the SEC ended with the company being fined $125 million — a far cry from the $2 billion penalty the regulator initially sought — in August.
The case, which began in 2020, has been prominent in the ongoing legal debate over whether cryptocurrencies should be classified as securities or commodities, which has yet to establish a clear precedent.
XRP initially jumped more than 10% following the Grayscale XRP Trust news, but quickly gave up half those gains.
This year, XRP has mostly traded sideways, hitting a 2024 high of $0.73 in March, before dropping to $0.40 by mid-July.
At the time of writing, XRP is trading at $0.57, well below its all-time high of over $3 in 2018 and more than 200% off its 2021 peak of $1.90.
Kyle Baird is a Weekend Editor at DL News. Got a tip? Email at kbaird@dlnews.com.
