Stay connected with BizTech Community—follow us on Instagram and Facebook for the latest news and reviews delivered straight to you.
Grayscale Investments, a leading crypto asset management company, has recently submitted a proposal to the New York Stock Exchange (NYSE) to launch an XRP-based exchange-traded fund (ETF).
This move aims to convert the Grayscale XRP Trust, which currently manages $16.1 million in assets, into an ETF. If approved, investors will be able to trade shares of the ETF on the exchange without needing to own XRP directly.
The Grayscale XRP Trust is one of the largest investment funds focused on XRP. However, with crypto regulations still being stringent in the United States, a critical question arises: Will the Securities and Exchange Commission (SEC) approve this XRP-based ETF?
Table of Contents
XRP ETF: Opportunities and Grayscale’s Strategy
An ETF (exchange-traded fund) is an investment vehicle that allows investors to gain exposure to assets such as stocks, commodities, or cryptocurrencies without holding them directly. If Grayscale’s proposal is approved, the XRP ETF will allow investors to easily track XRP’s price movements, enhance market liquidity, and broaden the investor base.
Source: NYSE
This proposal is part of Grayscale’s broader strategy to expand its offerings of diverse crypto investment products. Previously, the company filed for a Solana-based ETF and launched the Grayscale Bitcoin Miners ETF (MNRS), focusing on mining companies.
This move also reflects a growing trend in which traditional financial institutions are increasingly considering using crypto-based ETFs to attract institutional investors.
Regulatory Challenges: SEC’s Stance on Crypto
While many investors welcome Grayscale’s initiative, securing approval from the SEC is the primary challenge.
The U.S. financial regulator is known for its strict stance on cryptocurrencies, particularly XRP. In 2020, the SEC sued Ripple Labs, the company behind XRP, alleging that XRP was an unregistered security.
However, in 2023, Ripple won a significant portion of the case. The court ruled that XRP is not a security when traded on secondary markets. This decision marked a major victory for the XRP community but did not entirely eliminate regulatory uncertainty.
The big question is whether the SEC will treat the XRP ETF similarly to the Bitcoin Spot ETF, which was approved in early 2024.
Some analysts argue that Ripple’s legal victory could pave the way for its approval. However, others caution that the SEC may still proceed carefully, given the long history of tension between regulators and crypto assets.
Potential Impact on the Crypto Market
If the XRP ETF is approved, it could serve as a significant milestone for institutional crypto adoption. Beyond increasing liquidity and accessibility for XRP, such approval could also open the door for more crypto-based ETFs. Conversely, a rejection from the SEC could slow innovation in the sector and send a negative signal to the market.
Grayscale appears prepared to face these regulatory challenges. The company has demonstrated its commitment to expanding crypto investment products, even within a complex regulatory environment.
Awaiting the SEC’s Decision
The crypto community and institutional investors are watching closely the SEC’s response to Grayscale’s proposal. The regulator’s decision will impact the future of the XRP ETF and could also serve as an indicator of the broader direction of crypto regulation in the U.S.
In the meantime, Grayscale continues its efforts to mainstream cryptocurrencies in traditional finance. Will the XRP ETF be the next step in the crypto revolution? The answer may soon be revealed.
XRP Price Analysis
At the time this article was written, XRP was at a price level of $2.32, which means it has dropped by 32% from its highest point at a price level of $3.4.
Currently, XRP is moving in the Demand Area, which indicates there will be a rebound if the candlestick closes in that area.
However, it is also possible to continue its decline if Bitcoin is pressured again due to selling actions by market players who believe that interest rates will be steady next month.