Franklin Templeton filed a Form S-1 with the U.S. Securities and Exchange Commission (SEC) on March 11, 2025, to launch the Franklin XRP ETF, a spot exchange-traded fund designed to track the price of XRP. This marks the asset manager's latest foray into crypto ETFs, having already launched spot Bitcoin and Ethereum funds and filed for a Solana ETF.
ETF Structure and Custody
The proposed fund will be structured under the Delaware-based Franklin XRP Trust, formed on Feb. 28, 2025. It will hold actual XRP tokens, stored by Coinbase Custody Trust Company, LLC, with cash managed by State Street Bank and Trust Company. Shares will trade on the Cboe BZX Exchange, enabling investors to gain exposure to XRP without directly handling the cryptocurrency. Authorized participants can create or redeem shares in large blocks using XRP or cash, with transaction fees borne by participants. The fund's net asset value (NAV) will be calculated daily using the CF Benchmarks Index, which aggregates pricing data from major exchanges including Coinbase, Bitstamp, Kraken, and LMAX Digital. An intraday indicative value, updated every 15 seconds during market hours, will provide real-time price estimates. Notably, Coinbase accounted for 58% to 61% of the index's trading volume in 2024, underscoring its dominance in pricing calculations.
Fee Structure and Risks
Franklin Templeton will charge an annualized sponsor's fee (exact percentage redacted), covering ordinary expenses such as custody, administration, and legal costs up to a specified threshold. Extraordinary expenses (e.g., litigation or regulatory penalties) would be borne by the fund, potentially requiring XRP sales that trigger taxable events for shareholders. The filing states the fund will not hold non-XRP crypto assets without explicit regulatory approval.
Market Context and Competition
The filing follows a court ruling that XRP is not a security when sold on exchanges, resolving a long-standing SEC lawsuit against Ripple Labs. Despite this clarity, risks include regulatory shifts, market volatility, and operational challenges tied to XRP's blockchain governance. With the Trump administration, Wall Street heavyweights are betting the regulatory landscape will loosen. Competitors like Grayscale and 21shares have similar XRP ETF applications pending, reflecting heightened institutional demand. If approved, the Franklin XRP ETF could broaden mainstream investor access to XRP through traditional brokerage channels, mitigating technical barriers associated direct crypto ownership. The SEC's decision could signal an evolving stance on crypto-based financial products.