Investors looking to acquire XRP without the complexities of a cryptocurrency exchange now have five exchange-traded funds (ETFs) to choose from. Each of these funds directly holds XRP, allowing them to trade on regular stock markets, and they can be purchased through standard brokerage accounts. While they may appear similar on the surface, several important differences set them apart, particularly in terms of fees and liquidity.
Choosing the right fund can be challenging, as at first glance they seem almost identical. However, key distinctions emerge primarily through fee structures and the ease with which one can buy or sell the funds. Notably, while the most popular fund isn’t the cheapest option available, and the cheapest is still reliable, the right choice may depend on whether an investor plans to hold for the long term or trade frequently.
Examining the five ETFs, all of them hold XRP directly without leverage or futures, making them difficult to differentiate in terms of holdings. Thus, distinctions largely come down to operational terms. Fees—annually charged percentages taken by the funds—are a critical aspect. Additionally, liquidity, which measures how easily one can buy or sell the fund without impacting its price, plays a significant role.
The varying costs of these funds are more pronounced than one might expect. For instance, the fund with the highest fee charges more than two and a half times what the least expensive option costs. Daily trading volumes also differ significantly among them, with some funds far more active than others.
- Bitwise (XRP): 0.34% fee, $293 million in assets, $493 million cumulative inflow, $14.5 million in daily trading value.
- Franklin Templeton (XRPZ): 0.19% fee, $235 million in assets, $410 million inflow, $4.2 million daily trading value.
- Canary (XRPC): 0.50% fee, $235 million in assets, $461 million inflow, $1.7 million daily.
- 21Shares (TOXR): 0.30% fee, $113 million in assets, -$20 million inflow, $0.2 million daily.
- Grayscale (GXRP): 0.35% fee, $58 million in assets, $131 million inflow, $1.5 million daily.
Franklin Templeton’s XRPZ has emerged as the most economical option, charging only 0.19% annually. For those intending to maintain their investment over several years, this fee significantly lowers overall costs compared to others, especially when contrasted with the priciest fund, Canary, which charges 0.50%. A $10,000 investment would incur approximately $19 annually with Franklin versus $50 with Canary.
For active traders, however, the decision may be different. Here, liquidity becomes paramount. Although Franklin is cheaper, Bitwise stands out with its higher trading volume, offering tighter spreads—the difference between buying and selling prices. This helps traders execute larger orders without substantial price shifts. Bitwise manages daily trades worth around $14.5 million, dwarfing the daily volumes of the other four funds combined.
As investments in these funds have recently slowed compared to their initial launch phase, it’s worth noting that the overall value of these funds has declined. Since their debut, approximately $1.47 billion has flowed into them, yet their current combined value sits at about $934 million. This drop highlights the inherent risks associated with investing in XRP, as the volatility of the coin itself has overshadowed movements in fund fees or liquidity.
Ultimately, whether an investor opts for Franklin Templeton for its lower fees or Bitwise for its superior trading flexibility, the overarching factor remains the performance of XRP itself. With this in mind, investors are encouraged to focus less on minor differences between the funds and more on the cryptocurrency’s potential market trajectory.
