Franklin Templeton Files for XRP ETF Amid Growing Institutional Interest

Franklin Templeton, a prominent asset manager with over $1.5 trillion in assets under management, has filed with the Securities and Exchange Commission (SEC) to list an XRP exchange-traded fund (ETF). This move is part of a broader trend of institutional interest in cryptocurrencies, particularly in the wake of the SEC's recent actions regarding other digital asset ETFs. The filing seeks to provide investors with exposure to the spot price of XRP, with the assets to be custodied by Coinbase Custody. The shares of the XRP ETF would be traded on the Cboe BZX Exchange, created and redeemed using cash converted into XRP via a third party. Notably, investors in this ETF would not have access to XRP Ledger forks or airdrops.

The SEC has a 240-day window to evaluate Franklin Templeton's application and make a decision. This process involves both the asset manager and the exchange working together. The asset manager submits an S-1 registration statement to the SEC, detailing how the ETF will function, while the exchange files a 19b-4 rule change proposal to list and trade the ETF. The SEC then reviews the exchange’s filing, with the option to extend the deadline for further evaluation before making a final decision.

Franklin Templeton's filing for an XRP ETF is the latest in a series of similar proposals by other asset managers. This growing list of applications reflects the increasing institutional interest in digital assets and the potential for ETFs to provide a regulated and accessible way for investors to gain exposure to cryptocurrencies. However, the regulatory landscape remains uncertain, with the SEC's recent actions on other digital asset ETFs indicating a cautious approach. Analysts have expressed skepticism about the likelihood of approval for these ETFs, given the SEC's history of delaying decisions and the complex regulatory environment surrounding digital assets.

The proposed ETF is designed to be a passive investment vehicle, not a leveraged product. The fund will not utilize leverage, derivatives, or similar instruments in seeking to meet its investment objective. The shares of the proposed ETF will reflect the price performance of XRP and will be listed and traded on the Cboe BZX Exchange. The fund is intended to offer a convenient means of making an investment similar to an investment in XRP relative to acquiring, holding, and trading XRP directly on a peer-to-peer or other basis or via a digital asset platform.

This move by Franklin Templeton underscores the growing institutional interest in cryptocurrencies and the potential for ETFs to provide a regulated and accessible way for investors to gain exposure to digital assets. However, the regulatory landscape remains uncertain, and the SEC's cautious approach to digital asset ETFs may pose challenges for the approval of these funds. Despite these challenges, the increasing number of applications for digital asset ETFs reflects the growing interest in this asset class and the potential for ETFs to play a significant role in the future of digital asset investing.