One of the world’s leading crypto fund managers, Grayscale, on Thursday, announced its plans to launch a closed-end XRP trust in the US, seeking to allow accredited investors to buy shares that track the price of the XRP token. The new Grayscale XRP Trust could potentially lay the ground for an XRP-based exchange-traded fund (ETF) in the United States, subject to the Securities and Exchange Commission (SEC) approval.
As the news spread, the price of XRP spiked sharply, according to CoinGecko data. The token rose by over 7% within the span of an hour, shooting from under 54 cents to as high as 57 cents, before settling at $0.5622 as of publication time.
Grayscale Introduces Dedicated XRP Trust
In a major development for XRP investors, Grayscale Investments announced on Sept. 12 the creation and public launch of the Grayscale XRP Trust. This trust will give accredited investors direct exposure to the popular XRP cryptocurrency.
“We believe Grayscale XRP Trust gives investors exposure to a protocol with an important real-world use case,” posited Grayscale’s Head of Product & Research, Rayhaneh Sharif-Askary. “By facilitating cross-border payments that take just seconds to complete, XRP has the potential to transform the legacy financial infrastructure.”
We are proud to announce the creation of a new single-asset crypto investment fund, Grayscale $XRP Trust, which will be available through private placement.Available to eligible accredited investors.Read the press release: https://t.co/rOmVPUSFxZ pic.twitter.com/WEhk849RmT
— Grayscale (@Grayscale) September 12, 2024
The firm stated that the XRP fund is allowing daily subscriptions by eligible individual and institutional accredited investors. It functions like Grayscale’s other single-asset investment trusts and is exclusively invested in the token underpinning the XRP Ledger (XRPL).
Grayscale previously managed an XRP Trust but dissolved it in 2021 after the Securities and Exchange Commission sued Ripple in late 2020 and claimed that the token was a security under U.S. federal laws. Ripple has since scored major victories in the high-profile case against the securities regulator, clearing the long-standing regulatory hurdles for XRP.
Grayscale has previously successfully transformed its Bitcoin and Ether trusts into spot exchange-traded funds. Its Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE) are currently among the top investment products for institutional investors seeking exposure to the top two major cryptocurrencies, Bitcoin and Ether.
XRP ETF Arriving Soon?
Unlike an exchange-traded fund, which must secure the SEC’s blessing before launching, Grayscale’s new trust has fewer regulatory restrictions. But this also indicates that the XRP fund could be transformed into an ETF with the SEC’s green light.
“An ETF must be approved by the Securities and Exchange Commission since it is marketed directly to retail investors, while a trust’s structure and sales pitch to so-called accredited investors gets a lighter regulatory touch,” Fox Business’ Eleanor Terrett noted in a separate report.
Grayscale’s launch comes at a time when the legal tussle between Ripple and the SEC has come to an end. Perhaps. Ripple was instructed to pay $125 million in fines — which is a tiny fraction of the nearly $2 billion the SEC sought. There is ongoing speculation that the SEC may seek to appeal the ruling on XRP secondary trades.
