Franklin Templeton Files for XRP ETF, Awaits SEC Review

Franklin Templeton, a leading global asset management firm, has made a notable advancement in the cryptocurrency market by submitting an S-1 registration statement to the U.S. Securities and Exchange Commission (SEC) for an XRP exchange-traded fund (ETF). This move marks a pivotal step in the firm's efforts to introduce the Franklin XRP Trust, a Delaware Statutory Trust designed to mirror the market performance of the XRP token. This structure allows investors to gain indirect exposure to the cryptocurrency without the need for direct ownership.

The proposed ETF is set to be listed on the Cboe BZX exchange, aligning with the platform chosen by other asset managers who have applied for similar XRP ETFs. Coinbase Custody has been appointed as the custodian for the XRP assets held by the trust. The CSC Delaware Trust Company will serve as the sole trustee of the fund, while another entity, whose name has not been disclosed, will handle cash custody, transfer agent duties, and administrative functions. Franklin Templeton will act as the sponsor and marketing agent for the fund.

Following the submission of the S-1 registration, the next procedural step involves Cboe filing a corresponding 19b-4 form with the SEC. This filing formally indicates the exchange’s intent to list the ETF’s shares. The SEC will then commence its review process, which typically takes up to 240 days before a final decision is rendered. Many analysts anticipate that the SEC will acknowledge Franklin Templeton’s filing, as it has done with similar applications from other firms. However, the outcome remains uncertain due to the SEC’s cautious approach to cryptocurrency-related financial products.

The ongoing legal dispute between Ripple and the SEC adds another layer of complexity to the XRP ETF landscape. The case, currently before the U.S. Court of Appeals for the Second Circuit, revolves around the SEC’s claim that Ripple’s institutional sales of XRP constituted unregistered securities transactions. A prior court ruling determined that Ripple’s XRP sales to institutional investors met the criteria of investment contracts, resulting in penalties and restrictions on future institutional sales. Ripple is reportedly in negotiations to overturn this decision, which could have significant implications for both the company and the broader regulatory status of XRP.

Despite the unresolved lawsuit, interest in XRP ETFs continues to grow. Several asset managers remain optimistic about securing approval, viewing XRP as a viable addition to the expanding landscape of cryptocurrency-based financial products. The filing by Franklin Templeton is a significant development in the cryptocurrency market, as it represents one of the largest asset management firms entering the space. The reaction from Ripple CEO Brad Garlinghouse, who acknowledged the development on social media with a brief but notable reaction, underscores the industry's attention to this move. Nate Geraci, President of The ETF Store, also commented, highlighting Franklin Templeton’s prominence in the asset management industry and describing the firm as a significant player in the ongoing push for cryptocurrency ETFs.