The closed-end fund will offer accredited investors direct exposure to XRP (XRP). Grayscale previously offered an XRP Trust but dissolved it in 2021 following the U.S. Securities and Exchange Commission’s (SEC) 2020 lawsuit against Ripple Labs that alleged the XRP token is a security under federal securities laws.
Ripple Labs, the company behind the XRP Ledger and XRP token, has since achieved a significant legal victory in a widely followed court case against the SEC. In July 2023, a federal judge ruled that XRP is not necessarily a security when sold to the general public on exchanges, clearing regulatory headwinds for the XRP token and opening doors for institutional investment.
“We believe Grayscale XRP Trust gives investors exposure to a protocol with an important real-world use case,” said Grayscale’s Head of Product & Research, Rayhaneh Sharif-Askary, in a press release. “By facilitating cross-border payments that take just seconds to complete, XRP can potentially transform the legacy financial infrastructure.”
Ripple’s XRP Ledger is an open-source, decentralized blockchain technology designed to enable fast and low-cost international money transfers. XRP serves as a bridge currency in transactions involving different fiat currencies, making cross-border payments more efficient and accessible.
The Trust functions like Grayscale’s other single-asset investment trusts and is solely invested in the token underpinning the XRP Ledger.
On the news of the Trust’s launch, XRP spiked 8%, reflecting renewed investor confidence in the token’s future prospects.