In early January 2024, NYSE Arca, a subsidiary of the New York Stock Exchange, filed paperwork to transform Grayscale XRP Trust into a spot ETF. This strategic change aims to simplify U.S. investors' access to XRP by eliminating the need to engage with wallets and exchanges.
The Filing and Its Purpose
According to the filing, Coinbase Custody Trust Company, LLC will act as the official custodian, while BNY Mellon Asset Servicing will handle administration and transfers. This initiative allows U.S. investors to simplify access to XRP by avoiding wallets, exchanges, or keys.
Steps and Process Involved
The process involves two main steps. First, Grayscale coordinates with NYSE Arca, which drafts and submits what’s known as a 19b-4 filing. This form is required whenever a U.S.-based exchange wants to introduce a new ETF product. Once the filing is published in the Federal Register, the SEC is under a tight deadline to respond.
XRP Price Determination and NAV Calculation
NAV is central to the ETF's operation. Grayscale claims it calculates this value every business day at precisely 4:00 p.m. EST. The current market price of XRP is determined as the Index Price, then multiplied by the Trust’s XRP holdings. The price is based on data from major crypto exchanges such as Coinbase, Kraken, Bitstamp, Crypto.com, and LMAX Digital, which are closely monitored for compliance with U.S. AML and KYC laws.
The surge in interest for crypto-linked ETFs on Wall Street follows the successful launch of Bitcoin ETFs in January 2024. With the introduction of a new SEC chairman, there may be a potential acceleration in the decision-making process for ETF applications.
