Franklin XRP ETF Stock Price, News & Analysis

Franklin XRP ETF (XRPZ) is an exchange-traded product sponsored by Franklin Templeton that is designed to provide investors with exposure to the price movements of XRP, a digital asset used for real-time, low-cost cross-border payments and settlement. According to Franklin Templeton, XRPZ seeks to reflect, before fees and expenses, the performance of XRP as measured by the CME CF XRP-Dollar Reference Rate, New York Variant, and is listed on NYSE Arca.

The fund is structured as a grantor trust that holds XRP. The net asset value (NAV) of the fund is calculated daily based on its XRP holdings and the CME CF XRP-Dollar Reference Rate (New York Variant). The fund holds only XRP and cash and is described as a passive investment vehicle that does not actively manage its portfolio or use leverage, derivatives or similar instruments.

Exposure to XRP Through an Exchange-Traded Product

Franklin Templeton states that XRPZ is intended to offer a regulated way to access XRP through the transparency and oversight associated with an exchange-traded product. This is not a direct investment in XRP itself, but rather in a vehicle that invests in XRP. The fund is not an investment company registered under the Investment Company Act of 1940 and is not a commodity pool for purposes of the Commodity Exchange Act.

The underlying asset, XRP, is described as a digital asset that facilitates real-time, low-cost cross-border payments. It operates on the XRP Ledger (XRPL), a decentralized, open-source blockchain designed for payments, remittances, and tokenization. The XRPL uses a federated consensus model to validate transactions, enabling near-instant settlement at minimal cost and with low energy usage, and is used by financial institutions and payment providers to support international transfers.

Fund Structure and Key Service Providers

Within the structure of the Franklin XRP ETF, Coinbase Custody Trust Company, LLC serves as the XRP custodian. The Bank of New York Mellon acts as administrator, transfer agent, and cash custodian. CSC Delaware Trust Company serves as trustee. Franklin Distributors, LLC, a member of FINRA and SIPC, is identified as the marketing agent for the Franklin XRP ETF.

The fund is described as a passive vehicle that does not attempt to time the market by selling XRP when prices are high or buying when prices are low, and it does not employ hedging techniques to reduce the risk of losses from XRP price decreases. The amount of XRP represented by each share is expected to decrease over the life of the fund due to the sale of XRP to pay the sponsor’s fee and other expenses. Without increases in the price of XRP sufficient to offset that decrease, the price of the shares may decline.

Risk Characteristics and Investor Considerations

Franklin Templeton highlights that all investments involve risks, including possible loss of principal, and that the fund is not suitable for all investors. The fund is not a diversified investment and is expected to be more volatile than investments in more broadly diversified portfolios. The value of the fund’s shares is directly related to the value of XRP, which has been highly volatile in the past and may continue to experience rapid and unpredictable price movements.

The fund’s documentation notes that extreme volatility, including substantial or sustained declines in XRP prices, could have a material adverse effect on the value of the shares, potentially resulting in the shares losing all or substantially all of their value. It also points to competitive pressures that may affect the fund’s ability to gather assets, and to the evolving and relatively unregulated nature of digital asset markets, where fraud, manipulation, security failures, or operational problems at digital asset exchanges or in the wider XRP market could negatively impact XRP and the fund’s shares.

Regulatory uncertainty in digital asset markets is identified as another source of risk. Adverse legislative or regulatory developments could affect the use of XRP, validation activity, digital wallets, services related to trading and custodying XRP, the operation of the XRP Ledger, or digital asset markets more broadly, which in turn could harm the value of XRP and the fund’s shares.

Index, Forks, and Operational Risks

The CME CF XRP-Dollar Reference Rate (New York Variant) used to calculate the value of the fund’s XRP has a limited performance history and may be volatile. The index administrator could experience system failures or errors, and errors in index data, computations, or construction may not be identified or corrected promptly, which could adversely affect the fund and its shareholders.

The fund does not have the ability or intention to hold any asset other than XRP and cash, and shareholders may not receive the benefits of any forks or airdrops associated with the XRP Ledger. A temporary or permanent fork in the XRP Ledger could adversely affect the value of the shares and may result in extraordinary expenses borne by the fund.

Security threats to the fund’s account at its custodian or prime broker could result in a halt of fund operations, loss of fund assets, or damage to the fund’s reputation, any of which could reduce the value of the shares. If the process for creating and redeeming creation units faces unanticipated difficulties, arbitrage activity that normally helps keep the share price close to NAV may be impaired, causing the share price to diverge from NAV.

Relationship to Franklin Templeton’s Digital Asset Lineup

Franklin Templeton indicates that XRPZ is part of its U.S. digital asset exchange-traded product lineup, which also includes the Franklin Bitcoin ETF (EZBC), Franklin Ethereum ETF (EZET), and the Franklin Crypto Index ETF (EZPZ. The firm presents XRPZ as a way to gain regulated custody, daily transparency, and liquidity related to XRP without the operational complexity of holding the token directly.

Franklin Resources, Inc., which operates as Franklin Templeton, is described as a global investment management organization with specialist investment managers and capabilities across equity, fixed income, alternatives, and multi-asset solutions. The Franklin XRP ETF is one of its digital asset-focused offerings, and the fund has filed a registration statement, including a prospectus, with the U.S. Securities and Exchange Commission for the offering.