Ripple Plans to Launch XRP Depository Receipts, What is It?

Bittime - Ripple plans to launch XRP Depository Receipts (DRs) so that institutional investors can get exposure to XRP without having to buy it directly through a crypto exchange. 

The plan to launch XRP DRs is carried out in partnership with Receipts Depositary Corporation (RDC) and Digital Wealth Partners (DWP), which allows investors to own XRP in the form of depository receipts.

How XRP Depository Receipts (DRs) Works 

XRP Depository Receipts (DRs) represent XRP ownership held at Anchorage, a bank regulated by the Office of the Comptroller of the Currency (OCC) in the United States. 

In other words, investors don't actually hold XRP directly, but they can still benefit from the asset's price movements.

This concept is a bridge between TradFi and DeFi. With XRP DRs, investors can invest in XRP without having to create an account on a crypto exchange, which is often an obstacle for many financial institutions.

Read Also: XRP Price Prediction to Increase in 2025, Here's the Reason! 

The Differences of XRP Depository Receipts (DRs) with ETFs

XRP Depository Receipts (DRs) are similar to Exchange-Traded Funds (ETFs) in that DR holders do not directly own the underlying asset, but instead benefit from price fluctuations. 

The difference is that DRs provide technical ownership of XRP held at a custodian, whereas ETFs focus more on trading securities that reflect the price of a particular asset.

Ripple hopes that XRP DRs can attract the interest of institutional investors who have been reluctant to invest directly in crypto assets. 

With a regulated banking and custodian structure in place, XRP DRs provide a higher level of security and convenience for large investors.

SEC Approval for XRP Depository Receipts (DRs)

In order for XRP Depository Receipts (DRs) to be widely accepted, Ripple had to go through various regulatory processes, including filing Form S-1 with the SEC. 

This process includes providing detailed information regarding asset custody, market monitoring, and risk mitigation against XRP price volatility.

The SEC will use the Howey Test to determine whether XRP DRs fall into the category of securities or not. 

Ripple must also prove that Anchorage can safely store XRP, as well as ensure investor protection from market manipulation.

Read Also: XRP Price Analysis is Stable Even though the Crypto Market is Crashing 

XRP FAQs

What is XRP and what is its use?

XRP is a digital asset created by Ripple Labs and designed to facilitate cross-border payments. XRP blockchain technology enables transactions in just a few seconds with very low fees making it ideal for international money transfers and micropayments.

What is the Difference Between XRP and Other Cryptocurrencies Like Bitcoin?

XRP supports a cross-border payment system with a focus on speed and cost efficiency, different from Bitcoin which functions more as a store of value and investment tool. In addition, XRP uses a consensus mechanism that does not require mining so it is more energy efficient.

How much is 1 XRP USD?

Currently, 1 XRP is worth $2.47 according to Coinmarketcap. 

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Reference

MSN, Ripple makes plans to launch XRP depository receipts, accessed February 9, 2025.

Coinmarketcap, Coinmarketcap XRP Currency, accessed February 9, 2025.

Author: IPR