The U.S. Securities and Exchange Commission (SEC) announced on June 17 that it has initiated proceedings to evaluate a proposed rule change by Cboe BZX Exchange Inc. regarding the listing and trading of the Franklin XRP ETF. This marks a significant milestone in the journey toward the first spot XRP exchange-traded fund in the United States, following the successful launches of Bitcoin and Ethereum ETFs.
SEC Initiates Formal Review Process
The SEC stated that it is instituting proceedings under Section 19(b)(2)(B) of the Securities Exchange Act of 1934 to determine whether to approve or disapprove the proposed rule change. Originally filed on March 13, 2025, the proposal was previously extended for review on April 29. Now, the SEC is opening the floor for public input, specifically seeking comments on whether the proposal is designed to prevent fraudulent and manipulative acts and practices, and whether it raises any new or novel concerns.
The SEC’s notice highlights compliance with Section 6(b)(5) of the Exchange Act, which requires rules that deter fraud and safeguard public interest. Interested parties are invited to submit written comments through official SEC channels, with the comment period expected to last several weeks. The regulator is particularly focused on the unique aspects of XRP, which has a history of legal uncertainty regarding its classification as a security.
ETF Structure and Custody Details
The Franklin XRP ETF, managed by Franklin Holdings LLC, aims to mirror the performance of XRP’s price before expenses. Coinbase Custody Trust Company LLC will serve as the XRP custodian, while daily valuation will be based on the CME CF XRP-Dollar Reference Rate – New York Variant. Share creations and redemptions will be conducted in cash or in-kind in units of 50,000 shares.
The filing clearly states the fund’s asset composition: “The Fund will hold only XRP, cash, and cash equivalents.” This simple structure aligns with existing commodity-based trust shares, reducing counterparty risk and ensuring transparency. The sponsor emphasized that these components are consistent with the ETF’s investment objective and operational framework.
Market Impact and Outlook
The SEC’s move comes amid growing institutional confidence in XRP, following the partial resolution of the SEC vs. Ripple lawsuit. If approved, the Franklin XRP ETF would become the first spot XRP ETF in the U.S., providing traditional investors with regulated, convenient exposure to the digital asset. Analysts expect that such approval could significantly boost XRP’s liquidity and price, similar to the impact seen with Bitcoin ETFs.
However, the regulatory path remains uncertain. The SEC has not set a definitive timeline for a decision, and the public comment period may lead to additional requests for information. Market participants are closely watching the SEC’s approach to XRP’s legal status, which remains a key differentiator from Bitcoin and Ethereum. Nevertheless, the launch of formal proceedings is widely seen as a positive step toward mainstream adoption of XRP.