SEC Formally Reviews Franklin XRP ETF Proposal
The U.S. Securities and Exchange Commission (SEC) announced on June 17, 2025, that it has initiated proceedings to evaluate a proposed rule change submitted by Cboe BZX Exchange Inc. The proposal seeks to list and trade shares of the Franklin XRP ETF, a spot exchange-traded fund tracking the price of XRP. This move marks a significant step in the regulatory pathway for XRP-based investment products, reflecting growing institutional confidence in the digital asset.
According to the SEC order, the proposal was originally filed on March 13, 2025. The Commission had extended its review timeline on April 29 but has now opened formal proceedings under Section 19(b)(2)(B) of the Securities Exchange Act of 1934. The SEC is now soliciting public comments to assist in its decision to approve or disapprove the rule change.
ETF Structure and Asset Composition
The Franklin XRP ETF is managed by Franklin Holdings LLC and aims to reflect the performance of XRP's price, before expenses. Coinbase Custody Trust Company LLC will serve as the custodian for the XRP holdings. Daily valuation will be determined using the CME CF XRP-Dollar Reference Rate – New York Variant. Share creations and redemptions may be executed in cash or in-kind, in units of 50,000 shares.
As stated in the filing, the fund will hold only XRP, cash, and cash equivalents. The sponsor emphasized that this composition aligns with the ETF's investment objective and operational structure, minimizing exposure to non-core assets.
SEC's Focus: Fraud Prevention and Market Integrity
The SEC's notice highlights concerns regarding compliance with Section 6(b)(5) of the Exchange Act, which requires exchange rules to be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest. The Commission specifically requested feedback on whether the proposal to list and trade shares of a trust holding XRP “is designed to prevent fraudulent and manipulative acts and practices or raises any new or novel concerns not previously contemplated by the Commission.”
Interested parties are invited to submit written comments via the SEC’s official channels within the specified period. Legal experts note that the SEC's approach to XRP ETFs has become more favorable following a court ruling that clarified XRP’s status as not inherently a security, thereby reducing regulatory uncertainty.
Market Implications and Outlook
Following the announcement, XRP's price experienced a modest uptick, reflecting renewed optimism among traders and investors. If approved, the Franklin XRP ETF would become the first spot XRP ETF in the U.S., following the precedent set by Bitcoin and Ethereum spot ETFs. Several asset managers have already filed for similar products, and the SEC’s decision could set a regulatory benchmark for future crypto ETFs.
Nevertheless, the SEC may still reject the proposal citing concerns over market manipulation, liquidity, or investor protection. Market participants are closely watching the public comment period and the Commission’s final ruling. Regardless of the outcome, the initiation of formal review underscores the maturation of the cryptocurrency market and the accelerating trend of institutional adoption.