Grayscale is launching U.S. XRP Trust
Grayscale is launching Investments, a digital asset investment firm and subsidiary of the Digital Currency Group alongside Grayscale Litecoin Trust (LTC), has now launched the Grayscale XRP Trust, signaling an influx in demand from investors looking to get exposure to XRP. Launched on September 12, the trust has since been open to accredited investors on a daily basis and could soon be the building block of an XRP-based exchange-traded fund (ETF) — provided it secures approval from the U.S. Securities and Exchange Commission (SEC).
The news follows a bumper year for the Grayscale business, which already manages a huge portfolio, including an eye-watering 222,300 Bitcoin (BTC) worth $12.8 billion through its Grayscale Bitcoin Trust, signaling only further commitment in the company’s efforts to broaden their crypto investment product range. The XRP Trust is Grayscale’s latest single-asset investment product, aiming to provide investors with exposure to the cryptocurrency, which is well-known for fast and cost-effective cross-border payments.
What Exactly Is Grayscale XRP Trust?
Like Grayscale’s other single-asset investment vehicles (Bitcoin, Ethereum, and Litecoin), the Grayscale XRP Trust operates as a private placement. Similarly to other public quotations of its bitcoin and Litecoin shares. Providing a way for accredited individual and institutional investors to participate in the investment by the trust itself, which holds XRP. This, in turn, will make it an appealing alternative for investors who want access to the crypto economy through a more regulated environment.
The XRP Ledger (XRPL) is very high-functioning utilitywise in the real world, especially for cross-border payments where payment transactions settle instantly and globally or within a few seconds at most,” says Grayscale head of product and research Rayhaneh Sharif-Askary. As the globe witnesses an incessant need for better and faster financial systems, perhaps XRP is on its way to modernize older infrastructures. A common thread in the decision to list XRP is Grayscale’s acknowledgment of the fundamental value of the token and the technology it supports from a long-term perspective.
Crypto Trust vs. ETF: What’s the Difference?
The availability of XRP Trust in Grayscale’s range is certainly an interesting proposition for accredited investors, yet there is also a need to highlight a few differences between a trust and an ETF. As a product aimed at retail investors, an ETF would need to be approved by the U.S. Securities and Exchange Commission (SEC) and therefore would operate under tighter oversight regulations.
On the other hand, a crypto trust such as the Grayscale XRP Trust is tailored to institutional and accredited investors which have set financial standards. As such trusts are often lightly regulated, compared to other types of investment. This is an important differentiation as Grayscale looks to ultimately offer a XRP ETF for retail investors, which would trade on public exchanges making access to XRP more accessible for all.
Real-World Use Case for XRP
The move by Grayscale to introduce an XRP trust highlights increasing attention on the real-world use cases of the XRP Ledger. For years, XRP has been considered ‘a utility token’ that aids in the fast transaction of cross-border payments settling within seconds at almost no cost. Unlike the traditional banking ecosystems that might necessitate numerous intermediaries and thus consume several days to complete a single transaction, XRP facilitates and cheapens this process, which has made it an eye candy for financial institutions needing faster global payments.
For Rayhaneh Sharif-Askary, Grayscale head of product and research, XRP is built specifically to upgrade financial infrastructure — a powerful catalyst that may be about to change the cross-border payment ecosystem completely. With global remittances touching 794 billion dollars, a new brand of currency like XRP could reshape the way we do finance in the future.
Why the Grayscale XRP Trust Matters?
This move is no small step for Grayscale into XRP. The XRP Ledger Powering Real World Use-cases for a Decentralized Financial System. The XRP Ledger (XRPL) is one of the leading decentralized public blockchains specifically designed to handle use cases related to global financial systems ranging from cross-border payment solutions, tokenization platforms & decentralized finance (DeFi). Probably the most important attribute of XRP is that it settles transactions in seconds, as opposed to days with traditional financial infrastructure.
Rayhaneh Sharif-Askary, The Mainstream Adoption of XRP One of the most compelling benefits afforded by XRP is its speed and lower barrier to… She said,
“XRP has the potential to revolutionize the legacy financial infrastructure by enabling faster cross-border payments, which take a few seconds of execution.”
– Rayhaneh Sharif-Askary (Head of Product and Research, Grayscale)
This distinction reveals the utility of XRP as more than just a currency but as a way to dramatically improve global payments.
From Trust to ETF: A Four-Phase Journey
Though the XRP Trust marks an exciting launch on its own, Tchir said the real excitement will likely come down the line when it has a shot to become an ETF. A full XRP ETF could be on the way if a report from Fox Business is accurate, which states that another step toward that would be an introduction of the XRP Trust. But one thing that makes it quite different is that this is an investment type which has its own very unique distinction from the other types of investments.
Trusts such as the Grayscale XRP Trust are primarily reserved for accredited investors, and they receive less regulatory scrutiny. On the other hand, ETFs are sold directly to retail investors and receive SEC approval. According to Grayscale, their trusts follow a four-phase life cycle, which ends with an XRP ETF. The phased approach is designed to enhance transparency and investor access over time, eventually leading to an ETF listing.
Grayscale is experienced in taking products through this life cycle. The company launched its flagship Bitcoin Trust as a trust product that later transitioned into the Grayscale Bitcoin Trust ETF (GBTC) and became a spot BTC ETF — or one of the largest in the world. In line with the same, the potential of an XRP ETF would probably grow the liquidity, availability and investor involvement in the cryptocurrency market.
What’s Next for XRP?
This move is bringing XRP one step closer to becoming a mainstream financial asset as Grayscale launches The Grayscale®XRP Trust. If the broker achieves success in widening access among institutional investors, it could pave the way for an XRP ETF — solidifying XRP as a part of these broader crypto markets. XRP has already been tested in the real world for use cases such as cross-border payments and with Grayscale on board, the future of XRP seems very bright.
In an industry focused on trust and regulatory approvals, a successful transition of the XRP Trust to ETF status could become a future breakthrough for bringing XRP into mainstream for a global investment audience. The crypto world looks forward to what might be the next big move for XRP, a digital asset with an ocean of potential, as Grayscale remains on top, taking in its experience.