Franklin Templeton, the global asset management giant, filed a Form S-1 with the U.S. Securities and Exchange Commission (SEC) on March 11, 2025, seeking approval to launch the Franklin XRP ETF, a spot exchange-traded fund designed to track the price of XRP. This move marks the firm's latest foray into cryptocurrency ETFs, following its earlier launches of spot bitcoin (BTC) and ethereum (ETH) funds, as well as a pending application for a Solana ETF.
ETF Structure and Custody Arrangements
The proposed Franklin XRP ETF is structured as the Franklin XRP Trust, a Delaware statutory trust formed on February 28, 2025. The fund will hold actual XRP tokens, with Coinbase Custody Trust Company, LLC serving as the digital asset custodian, while cash holdings will be managed by State Street Bank and Trust Company. Shares are expected to trade on the Cboe BZX Exchange, providing investors with exposure to XRP without the complexities of direct cryptocurrency ownership.
Authorized participants—including registered broker-dealers—can create or redeem shares in large blocks using either XRP or cash. Transaction fees are borne by the participants, not the fund. The net asset value (NAV) of the fund will be calculated daily based on the CF Benchmarks Index, which aggregates pricing data from major exchanges such as Coinbase, Bitstamp, Kraken, and LMAX Digital. Notably, Coinbase accounted for 58% to 61% of the index's trading volume in 2024, underlining its dominance in price determination. An intraday indicative value will be updated every 15 seconds during market hours to provide real-time price estimates.
Fees and Risk Considerations
Franklin Templeton will levy an annualized sponsor’s fee, though the exact percentage remains redacted in the filing. The fee covers ordinary expenses including custody, administration, and legal costs up to a specified threshold. Extraordinary expenses—such as litigation costs or regulatory penalties—would be borne by the fund, potentially requiring sales of XRP that could trigger taxable events for shareholders.
The filing acknowledges several risks: regulatory shifts, market volatility, and operational challenges tied to XRP’s blockchain governance. However, the document highlights a favorable legal backdrop: a court ruling that XRP is not a security when sold on exchanges, which ended the long-running SEC lawsuit against Ripple Labs. Under the Trump administration, Wall Street heavyweights are betting that the regulatory landscape has become more accommodating.
Competition and Institutional Demand
Franklin Templeton is not alone in pursuing an XRP ETF. Rival firms such as Grayscale and 21shares have submitted similar applications that await SEC decisions. This wave of filings reflects surging institutional demand for regulated crypto exposure, particularly for assets like XRP that have gained legal clarity.
If approved, the Franklin XRP ETF would broaden mainstream investor access to XRP through traditional brokerage channels, mitigating technical barriers like wallet setup and private key management. The SEC’s ruling on this and similar applications could signal a definitive shift in the U.S. regulatory stance toward crypto-based financial products, potentially opening the door for more altcoin ETFs in the future.