Grayscale Launches First U.S. XRP Trust, Setting the Stage for a Potential ETF: FOX Business
Grayscale is launching the first U.S. XRP trust, providing accredited investors with direct exposure to XRP. This move could pave the way for the trust to be converted into an exchange-traded fund (ETF) in the future, pending regulatory approval.
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Because Bitcoin
September 12, 2024
Ripple
Grayscale
ETF
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According to an exclusive FOX Business report, Grayscale is set to announce the launch of the first U.S. XRP trust on Thursday morning. This "closed-end" fund will offer accredited investors direct exposure to XRP, the native token of the XRP Ledger blockchain, which powers cross-border transactions for Ripple.
Trusts and exchange-traded funds (ETFs) are distinct investment products. An ETF requires approval from the Securities and Exchange Commission (SEC) as it targets retail investors, whereas a trust, aimed at accredited investors, faces lighter regulatory scrutiny. With the right approvals, a trust can be converted into an ETF. This year, Grayscale successfully transitioned its bitcoin and ether trusts into ETFs.
Grayscale's XRP trust is part of a four-phase product life cycle that could eventually lead to an ETF. The company played a key role in bringing the first crypto ETFs to Wall Street by suing the SEC to convert its Bitcoin Trust into a "spot" ETF. The appeal win opened the door for firms like BlackRock and Fidelity to launch their own bitcoin ETFs, followed by several Ethereum ETFs.
XRP investors, known as the "XRP Army," have been eagerly waiting for an asset manager like Grayscale or BlackRock to file for an XRP ETF. However, uncertainty remains due to the SEC's ongoing legal battle with Ripple. The SEC sued Ripple in 2020 for not registering XRP sales as securities. A Manhattan judge later ruled that XRP sales to institutional investors could be considered securities transactions, but sales to retail investors in the secondary market could not. Ripple was fined $125 million for institutional sales, and the SEC has until early October to appeal the secondary market ruling.
