NYSE Arca Proposes XRP ETF Conversion Amid Evolving SEC Crypto Stance

NYSE Arca Moves to Convert Grayscale’s XRP Trust to Spot ETF Amid Shifting SEC Regulatory Landscape

In a significant development, NYSE Arca has filed a proposal with the U.S. Securities and Exchange Commission (SEC) to convert Grayscale’s XRP Trust into a spot-based exchange-traded fund (ETF). This move comes as the SEC’s regulatory stance on cryptocurrencies continues to evolve, with the agency recently approving the first U.S. Bitcoin futures ETF.

The proposed XRP ETF would track the performance of the XRP/USD exchange rate, providing investors with exposure to the cryptocurrency market through a regulated and easily tradable security. The conversion of the XRP Trust into an ETF would also allow Grayscale to offer its investors the option to redeem their shares for XRP, rather than cash.

Grayscale, the world’s largest digital currency asset manager, has been at the forefront of the push for a Bitcoin ETF, having filed multiple applications with the SEC in recent years. The firm’s XRP Trust, launched in 2019, is one of the largest investment vehicles for the cryptocurrency, with over $35 billion in assets under management as of December 2021.

The proposed XRP ETF would be the latest in a series of cryptocurrency-related products offered by Grayscale, which also includes trusts for Bitcoin, Ethereum, Litecoin, and other digital currencies. The firm has been actively engaged in discussions with the SEC regarding the regulatory framework for cryptocurrency ETFs, and has expressed optimism about the prospects for approval in the near future.

However, the SEC has been cautious in its approach to cryptocurrency ETFs, citing concerns about market manipulation and investor protection. In 2018, the agency rejected multiple applications for Bitcoin ETFs, but has since indicated that it may be more open to the idea of approving such products under certain conditions.

The shifting regulatory landscape for cryptocurrencies has been a major focus of the SEC in recent months, with the agency’s acting chair, Allison Herren Lee, stating that the agency is “very focused” on the issue. The SEC has also been engaged in discussions with other regulatory bodies, such as the Commodity Futures Trading Commission (CFTC), regarding the oversight of cryptocurrency markets