Grayscale Files to Convert XRP Trust into an ETF, Signaling Growing Market Demand

Grayscale, one of the largest cryptocurrency exchange-traded fund (ETF) issuers, has expanded its digital asset offerings.

Grayscale, a leading cryptocurrency exchange-traded fund (ETF) issuer, has filed an application with the U.S. Securities and Exchange Commission (SEC) to convert its existing XRP Trust into an ETF. The application was filed on Thursday and, if approved, would allow investors to gain exposure to XRP through a regulated investment vehicle.

Currently, Grayscale's XRP Trust has approximately $16.1 million in assets, which are 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 various 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.

Grayscale's XRP ETF filing is part of a wider 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.

However, SEC challenges and regulatory roadblocks may impact the approval timeline. According to Bloomberg analysis, XRP ETFs could be approved in 2025, while ETFs for other cryptocurrencies, such as Litecoin, may receive the green light earlier.

Litecoin, which is often compared to Bitcoin but has a smaller market capitalization, has generally faced fewer regulatory hurdles compared to XRP.

A major roadblock to the approval of an XRP ETF is the ongoing SEC lawsuit over whether XRP should be classified as a security. If the SEC maintains its stance that XRP is a security, it could prevent the cryptocurrency from being included in an ETF.

On the other hand, the analysis suggests that if a new SEC Chair, such as the rumored nominee Caroline Atkins, is confirmed, there is a possibility that these lawsuits could be dropped or wound down, which could clear the path for XRP ETFs. A similar regulatory uncertainty surrounds Grayscale's Solana ETF filing.

Despite the regulatory challenges, Ripple, the company behind XRP, is optimistic about the prospect of an XRP ETF. 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 Long's prediction holds true, XRP could join the growing list of digital assets making their way into mainstream investment vehicles. As regulatory decisions continue to unfold, industry stakeholders are keeping a close watch on the developments.