Global asset management company Grayscale Investment announced on September 12 that it had created and made the Grayscale XRP Trust public. The Grayscale XRP Trust is a closed-end fund that will allow accredited investors to explore and learn more about XRP without dealing with the risks of buying and holding the crypto.
The Grayscale XRP Trust is the first in the U.S. and could pave the way for an XRP ETF. While there is no clear mention of whether Grayscale will launch an XRP ETF, many speculate that the asset manager might convert the trust to an ETF.
Grayscale has notably converted its Bitcoin and Ether trusts to ETFs this year. Traders still noted fewer regulatory oversights and constraints in trusts than in ETFs. The U.S. Securities and Exchanges Commission supervises every ETF in the U.S.
The relaunch of the Grayscale XRP Trust is also creating positive sentiment toward the coin and its parent company, which has been under the U.S. SEC’s radar. Grayscale dissolved the original XRP trust in 2021 following the U.S. SEC’s $1.3 billion lawsuit against Ripple.
Grayscale first sold all its XRP before terminating the trust. At the time, Grayscale explained that it was becoming increasingly difficult for U.S. investors to convert their XRP to USD, leading to the decision.
Grayscale reveals a 4-phase plan for the Grayscale XRP Trust
Grayscale XRP Trust allows investors to gain exposure to $XRP, the token powering the XRP Ledger $XRPL, a distributed, peer-to-peer network created to help cross-border financial transactions.
Learn more, see important disclosures, or reach out to us: https://t.co/2gq5w3Fbpj pic.twitter.com/RrpdvmCQRl
— Grayscale (@Grayscale) September 12, 2024
Grayscale revealed that the trust would have the same 4-phase product cycle all its investment products undergo. The Grayscale XRP Trust is currently in the private placement stage, which allows accredited individual and institutional investors to interact with the product. Grayscale restricts the shares bought during this period for one year.
“We believe Grayscale XRP Trust provides investors with exposure to a blockchain solution that is potentially positioned to play a crucial role in optimizing legacy financial systems by streamlining cross-border payments.”
–Rayhaneh Sharif-Askary, Grayscale’s Head of Product & Research
The public quotation phase will allow the trust’s shares to be available for all investors, accredited or not. There will also be no restrictions on the investment amount or holding period. The investment company insisted that publicly traded shares may be at a premium or discount on the underlying asset.
The third stage involves the U.S. SEC reporting, significantly increasing the transparency surrounding the products to investors. The reporting stage reduces the restriction period for private placement to 6 months.
The last stage involves ETFs, which Grayscale describes as a general term for all exchange-traded investment products. The stage also involves more creation and ongoing redemptions to make the trust closer to ETFs.
XRP price spikes by 8% after announcement
The Grayscale XRP Trust announcement led to a significant spike in XRP prices despite the coin beginning the day in the reds. At the time of writing, XRP has gained approximately 8%, reaching $0.56. The coin’s price is still fluctuating despite the gains.
XRP market cap and 24-hour transaction volumes have also spiked. Its 24-hour trading volume is up by over 70%, recording over $1.5 billion.
The recovery comes after the XRP price plunged on September 11 following the U.S. presidential election debate. Kamala Harris supposedly outperformed Trump, who has been increasingly vocal about his support of crypto in a CNN-launched poll.
