Spot XRP ETF Coming? SBI Allies With Franklin Templeton

According to a report by Nikkei, SBI Holdings will establish a joint venture with Franklin Templeton, a prominent US investment management company, by the end of this year. The joint venture aims to explore the investment environment for spot Bitcoin ETFs in Japan and could be a new hope for a spot XRP Exchange Traded Fund (ETF) in the United States.

Franklin Templeton, known for its array of mutual funds and exchange-traded funds, will own 49% of the new company, while SBI Holdings will have a majority stake of 51%. This joint venture aligns with the growing interest in spot BTC ETFs following the US Securities and Exchange Commission’s (SEC) approval of 11 Bitcoin-focused ETFs earlier this year on January 11.

The collaboration is particularly noteworthy due to the potential tax advantages for Japanese investors if Bitcoin ETFs can be traded on the domestic securities market. SBI Holdings revealed that they have received “many requests” from Japanese customers.

The backdrop to this could be that physical Bitcoin is currently subject to a tax rate of approximately 55%, whereas a spot Bitcoin ETF would be taxed at only 20.315% on capital gains, as reported by Japanese news outlet Coinpost. Furthermore, the treatment of Bitcoin ETFs as “transfer income” would allow for the carrying forward of losses and aggregation of gains and losses, potentially netting investors smaller tax bills.

Why A Spot XRP ETF Became More Likely

Amidst these developments, the spotlight also turns to the possibility of a spot XRP ETF. SBI Holdings, a staunch ally of Ripple Labs, has been instrumental in promoting Ripple’s blockchain technology in Asia through their joint venture, SBI Ripple Asia, established back in 2016. This partnership is focused on enhancing cross-border payment systems using Ripple’s technology.

Notably, SBI Holdings has also been a significant supporter of XRP, recognizing its potential to facilitate fast and cost-effective international transactions. In 2018, SBI Ripple Asia led the creation of a consortium with several Japanese banks to leverage Ripple’s technologies for domestic and international payments.

During Ripple’s ongoing legal challenges with the SEC, SBI’s CEO, Yoshitaka Kitao, has been an outspoken supporter of Ripple’s technology. In June, Kitao commented, “If the conclusion is reached and XRP is a coin, I think it will be a very expensive price. If the conclusion (of the trial) is positive, I think the management will immediately go public.”

While the recent announcement does not explicitly mention a spot XRP ETF, the longstanding and deep relationship between SBI Holdings and Ripple Labs could potentially pave the way for such an ETF in the future. Following the approval of spot Bitcoin and Ethereum ETFs in the US, the introduction of a spot XRP ETF could be a bet on Donald Trump winning the US presidential election in November. Given the recent filings by VanEck and 21Shares to launch spot Solana ETFs in June, a similar initiative for a spot XRP ETF by SBI Holdings is not unthinkable.

At press time, XRP traded at $0.6137.

Featured image created with DALL·E, chart from TradingView.com