Why XRP Is Skyrocketing Today

XRP (CRYPTO: XRP) is rocketing higher in Friday's trading. The cryptocurrency's token price was up 11.1% over 24 hours of trading at 11 a.m. ET. Meanwhile, Bitcoin was up 1.1%, and Ethereum was up 3.3%.

XRP's valuation is surging following news that the Securities and Exchange Commission (SEC) had acknowledged Grayscale's application for an exchange-traded fund (ETF) built around the cryptocurrency. Grayscale is the company behind the Grayscale Bitcoin Trust, the Grayscale Ethereum Trust, and other securities built around cryptocurrencies.

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XRP surges following key initial step toward ETF approval

Yesterday, the SEC published a notice acknowledging that it had received Grayscale's filing to offer an XRP ETF as a publicly tradeable security. While the acknowledgement doesn't mean that the proposed ETF will be approved by the regulatory agency, it does signal that the SEC will consider the application and make a determination based on its findings. The agency has already shot down other filings to create securities built around altcoins, so the acknowledgment itself represents a beneficial development for the cryptocurrency.

What comes next for XRP?

News that the SEC has acknowledged Grayscale's XRP ETF application could be a good sign for the cryptocurrency in another way. The agency has been pursuing legal action against Ripple Labs, alleging that the fintech company offered the XRP token it created to investors as an unregistered security. The acknowledgment of Grayscale's ETF request could be a sign that the SEC will drop its legal challenge against Ripple Labs, which is currently in the appeals phase following a 2023 judgment.

Former SEC Chairman Gary Gensler stepped down from the role when President Trump returned to the White House and has been replaced by Mark Uyeda, who is generally considered much more supportive of the cryptocurrency industry. If Uyeda directs the agency to drop its appeals case against Ripple, it could open up another strong bullish stretch for XRP.

Adding another potential bullish catalyst for the cryptocurrency, President Trump is reportedly open to having the token included as part of a U.S. digital asset reserve. With political wins seemingly moving in XRP's favor, it wouldn't be surprising to see the token soar to new highs this year.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and XRP. The Motley Fool has a disclosure policy.