Grayscale Files to Convert XRP Trust into an ETF Amid Regulatory Uncertainty

Grayscale, one of the largest cryptocurrency exchange-traded fund (ETF) issuers, has expanded its digital asset offerings. On Thursday, the company filed an application with the U.S. Securities and Exchange Commission (SEC) to convert its existing XRP Trust into an ETF.

If approved, this ETF would be traded on the New York Stock Exchange, providing investors with a regulated and more accessible way to gain exposure to XRP.

Grayscale’s XRP Trust and Market Demand

Currently, Grayscale’s XRP Trust holds approximately $16.1 million in assets, invested by accounts that aim to gain exposure to XRP without directly purchasing and managing the cryptocurrency. The move to convert the trust into an ETF aligns with the broader trend of bringing digital assets into traditional financial markets through regulated investment vehicles.

“As an innovative and future-forward asset manager, Grayscale is committed to continuously identifying opportunities to offer products that meet client demand and expand investor access to digital assets and the broader DeFi ecosystem,” said Dave LaValle, Global Head of ETFs at Grayscale, in a statement.

The Broader Crypto ETF Landscape

Grayscale’s XRP ETF filing is part of a broader wave of applications for new crypto ETFs. Other digital assets, including Solana (SOL), Dogecoin (DOGE), and Litecoin (LTC), have also seen ETF applications submitted by various companies since the election of Donald Trump, who has ushered in a regulatory environment that appears more favourable toward the cryptocurrency industry.

SEC Challenges and Roadblocks

Despite the optimism surrounding crypto ETFs, Bloomberg analyst James Seyffart has cautioned against expecting immediate approval for an XRP ETF. Seyffart believes that while XRP ETFs could be approved in 2025, ETFs for other cryptocurrencies—such as Litecoin—are more likely to be greenlit first.

Litecoin, often regarded as Bitcoin’s lesser-known counterpart, has historically faced fewer regulatory hurdles compared to XRP.

A major roadblock to the approval of an XRP ETF is the ongoing SEC litigation concerning the classification of XRP as a security. If the SEC continues to assert that XRP falls under securities laws, it could prevent the cryptocurrency from being included in an ETF.

However, Seyffart notes that if a new SEC Chair, such as the rumoured nominee Atkins, is confirmed, there is a strong possibility that these lawsuits could be dropped or wound down, potentially clearing the path for XRP ETFs. A similar regulatory uncertainty surrounds Grayscale’s Solana ETF filing.

Ripple’s Optimism

Despite the regulatory ambiguity, Ripple, the company behind XRP, remains optimistic. Ripple President Monica Long recently told Bloomberg that she believes an XRP ETF is “next in line” and expects it to be approved “very soon.” If her prediction holds true, XRP could join the growing list of digital assets making their way into mainstream investment vehicles.

Conclusion

Grayscale’s move to convert its XRP Trust into an ETF is a significant development in the ongoing evolution of cryptocurrency investments. While the path to approval remains uncertain due to regulatory hurdles and ongoing SEC lawsuits, the growing interest in crypto ETFs signals a maturing digital asset market. Whether XRP will be among the next cryptocurrencies to receive ETF approval remains to be seen, but industry stakeholders are watching closely as regulatory decisions unfold.