Grayscale Files Application to Convert Its XRP Trust Into an XRP ETF

Grayscale is known for managing the third-largest Bitcoin ETF. Over the past few months, it introduced a Mini Bitcoin ETF and launched options trading.

Grayscale has filed a 19b-4 application with the U.S. Securities and Exchange Commission (SEC) to convert its XRP Trust into an XRP exchange-traded fund (ETF). The move comes as Grayscale continues to expand its lineup of crypto investment products, and the SEC has been slow to approve altcoin ETFs.

Grayscale is the world's largest digital currency asset manager, with over $40 billion in assets under management. The firm launched its Grayscale XRP Trust in 2020, and the trust currently holds $16 million in assets.

If approved, the Grayscale XRP ETF would be the first SEC-approved ETF for XRP, the native token of the Ripple network. Ripple has been locked in a legal battle with the SEC since 2020, with the SEC alleging that Ripple sold XRP as an unregistered security.

Grayscale's application comes amid growing demand for an XRP ETF. Ripple CEO Brad Garlinghouse has said that an XRP ETF approval is “inevitable,” and Polymarket data shows strong expectations for approval. However, the SEC vs. Ripple lawsuit could complicate the approval process.

Recently, the SEC removed the Ripple case from its website, and a crypto lawyer, Jake Chervinsky, commented on the situation:

“The single most important thing the SEC can do, and must do, to restore the rule of law is end its enforcement actions against crypto companies that acted in good faith and were ambushed by Gary Gensler. So far, the SEC has taken no public steps to right these wrongs. Why wait?”

The SEC has been undergoing a period of internal restructuring and leadership transitions, which has slowed the agency's ability to review and approve ETF applications. Several other companies, including WisdomTree, 21Shares, Canary Capital, and Bitwise, also have XRP ETF applications pending with the SEC.

ETF analyst James Seyffart noted:

“The SEC doesn’t have much of a pressing reason to rush as quickly as possible on this stuff. I personally think they’ll handle these applications after Atkins is confirmed and in his seat at the SEC.”

The SEC is currently facing staffing shortages, which could further delay decisions on XRP ETFs. However, the demand for an XRP ETF is growing, and Grayscale's application is likely to be met with interest from investors.

XRP's price has shown minimal movement following the filing. At the time of writing, XRP is trading at $3.09493 with a 0.22% increase. The asset's RSI is 42.71, indicating that XRP is neither overbought nor oversold.