Grayscale files for conversion of XRP Trust to a Spot ETF with the NYSE

On Jan. 30, NYSE Arca, a New York Stock Exchange subsidiary, filed the paperwork to transform Grayscale’s $16.1 million XRP Trust into a spot exchange-traded fund (ETF).

According to the filing, Coinbase Custody Trust Company, LLC will act as the official custodian, while BNY Mellon Asset Servicing takes charge of administration and transfer duties. This allegedly plans to give U.S. investors simpler access to XRP without the need to deal with wallets, exchanges, or keys.

The filing says, “The Trust is one of the world’s largest XRP investment funds by assets under management as of the date of this filing.”

What the filing means and how the process works

Per the filing, the process is a two-step grind. First, Grayscale coordinated with NYSE Arca, which drafted and submitted 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.

The SEC now has a tight timeline to act. Once this filing gets published in the Federal Register, the clock starts ticking for public comments and the SEC’s ultimate decision.

The XRP Trust is already structured to reflect the token’s market value through shares that fluctuate with XRP’s price movements. But here’s where things get technical.

NAV, pricing, and how XRP valuation gets calculated

At the center of this ETF’s operations lies the net asset value (NAV), which Grayscale claims it calculates every business day at precisely 4:00 p.m. EST New York time. Here’s how it works: they determine the current market price of XRP (known as the Index Price), then multiply it by the Trust’s XRP holdings.

But what exactly is this Index Price, you ask? Well, it’s a composite pulled from major crypto exchanges where XRP trades publicly. Coinbase, Kraken, Bitstamp, Crypto.com, and LMAX Digital feed pricing data into the equation, according to the filing.

These exchanges are reportedly monitored closely for compliance with U.S. anti-money laundering (AML) and know-your-customer (KYC) laws, according to the filing.

“The most common means of determining the value of XRP is by surveying one or more Digital Asset Trading Platforms where XRP is traded publicly and transparently,” the document claims.

This comes as appetite for crypto-linked ETFs is going rampant on Wall Street thanks to the iconic success of the Bitcoin ETFs that launched in January 2024. The industry went through hell to get them approved under the former SEC chairman Gary Gensler.

But that guy got the boot on Jan. 20, giving way to Paul Atkins to take over as chairman. Paul first invested in Bitcoin back in 2010, making him one of its earliest investors and a proud supporter of the industry. Until he gets confirmed by the Senate, former SEC commissioner Mark Uyeda has been assigned as acting chairman. As for the SEC-Ripple legal battle, it’s still very much ongoing, because even though Gary’s out, many of his little minions and so they’re dragging it out. They’ve filed a ridiculous appeal insisting yet again that XRP is a security.

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