Grayscale, the leading asset management company, has just announced the launch of its XRP Trust, a closed-end fund providing investors with access to Ripple’s XRP. This trust will operate similarly to Grayscale’s other single-asset funds.
Over the past two months, Grayscale has continuously expanded its portfolio with new funds for MakerDAO, Bittensor, SUI, and several other tokens. This marks a strategic shift from its focus on Bitcoin and Ethereum, both of which have recently been upgraded to ETFs.
Related: Grayscale Establishes Decentralized AI Fund LLC
Grayscale previously had a similar XRP fund, but it was shut down in 2021 due to the lawsuit between the SEC and Ripple Labs. The SEC accused Ripple of selling XRP as an unregistered security and unlawfully gaining $1.3 billion. In August 2023, the court issued a ruling, fining Ripple $125 million, temporarily resolving the legal dispute that had been ongoing since 2020.
Grayscale believes XRP has the potential to revolutionize the financial system, particularly in international payments due to its fast processing speeds. The launch of this new fund could pave the way for an XRP ETF in the future.
However, Nate Geraci, President of ETF Store, cautions that the approval process for an XRP ETF could face significant challenges and will likely require political support. Additionally, the ongoing legal battle between Ripple and the SEC adds further complexity to the process.
Under the leadership of Chair Gary Gensler, the SEC may not approve any other cryptocurrency ETFs beyond Bitcoin and Ethereum. However, there is still hope if new regulations are introduced that clearly define most digital assets as not being securities.
