One of the most prominent crypto asset management firms, Grayscale, has announced the launch of the first XRP trust in the US. Many see this as the first step toward an XRP exchange-traded fund (ETF).
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
Today (September 12), Grayscale has announced the launch of its XRP trust, a single-asset crypto fund for Ripple Labs’ native token. The trust will offer accredited investors direct exposure to the XRP token,
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, which powers the Ripple blockchain, which is used globally to facilitate cross-border transactions.
Grayscale’s XRP Trust Looks To Be A Stepping Stone Toward A Full XRP ETF
Although a trust and an ETF are two different investment products, this marks a significant step toward an eventual spot ETF for XRP. Any potential ETF needs approval from the US Securities and Exchange Commission as it is marketed directly to retail investors.
The structure of a trust is slightly different as its sales pitch is directed to ‘accredited investors, ‘ and therefore, it receives softer regulation from the SEC.
However, a trust can become an ETF with the right regulatory approvals. Grayscale’s previous single-asset investment trusts for Bitcoin and Ethereum have since evolved into full ETFs this year, giving two examples of this approach.
RELATED: XRP Struggling But Will These 2 Key Developments Rejuvenate Ripple Bulls?
The XRP Trust Will Have To Evolve Through Grayscales Four Life Cycle Phases Before Becoming A Full ETF
Grayscale operates its products on a four-phase life cycle, with the fourth phase being the highly coveted ETF stage. Currently, the XRP trust sits in the first stage (Private Placement) and will have to evolve through the second and third stages before it can become a full ETF.
The four phases listed are;
1. Private Placement
2. Public Quotation
3. SEC Reporting
4. ETF
The Crypto Asset Manager’s Successful Suing Of The SEC Paved The Way For Bitcoin And Ethereum ETFs
Grayscale is seen as one of the driving forces behind bringing the first crypto ETFs to Wall Street following its legal action against the SEC last year. The outcome of the case was favourable for the crypto asset manager, allowing the firm to convert its Grayscale Bitcoin trust into a spot ETF.
Grayscale won the case on appeal, and Wall Street’s big hitters, such as BlackRock, Fidelity, and Wisdom Tree, launched their own Bitcoin ETFs.
January 2024 was a historic time for the much-maligned crypto industry. Eleven different Bitcoin ETFs debuted on Wall Street, and the SEC has since approved six ETFs for the second-largest digital asset, Ethereum.
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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