What an XRP ETF is and how to buy one

An XRP ETF is an exchange-traded fund that holds XRP (the cryptocurrency issued by Ripple) or tracks its price movement. You buy shares of the ETF through a regular brokerage account, the same way you would buy shares of a stock. The ETF itself handles the custody and management of the underlying XRP, so you do not hold the cryptocurrency directly in a digital wallet.

To buy an XRP ETF, you need a brokerage account with a firm that offers it. Not all brokerages carry every ETF. You search for the fund by its ticker symbol, place an order during market hours, and the shares settle in your account within two business days. The process is identical to buying any other ETF.

As of now, XRP ETF options in the United States are limited. Spot XRP ETFs (funds that hold actual XRP rather than futures contracts) have not yet been approved by the SEC, though applications have been filed. Futures-based XRP ETFs exist but are less common and carry different risks than spot funds. Before you open an account, confirm that your chosen brokerage actually offers the specific fund you want.

Key Takeaways

  • You buy XRP ETF shares through a standard brokerage account using the fund's ticker symbol, just as you would buy any stock.
  • Not all brokerages offer XRP ETFs, so you may need to open an account with a firm that does or transfer to one that carries the fund you want.
  • Spot XRP ETFs (which hold actual XRP) are not yet available in the United States, though futures-based alternatives exist.
  • Orders placed during market hours settle within two business days, and you can sell your shares at any time the market is open.
  • ETFs charge annual fees (called expense ratios) that vary by fund, so compare costs before choosing which one to buy.

Finding a brokerage that offers XRP ETFs

Start by checking whether your current brokerage carries an XRP ETF. Log into your account and search the fund screener or ETF search tool by the ticker symbol of the fund you are interested in. If it does not appear, the brokerage does not offer it.

If your current brokerage does not carry the fund, you have two options: open a new account with a brokerage that does, or ask your current brokerage whether they can add the fund to their platform. Some firms will special-order ETFs that are not in their standard lineup, though this is uncommon.

Major brokerages that typically offer a wide range of ETFs include Fidelity, Charles Schwab, E*TRADE, and Vanguard. Smaller or specialized brokerages may have narrower selections. Check the brokerage's website or call their customer service to confirm they carry the specific XRP ETF you want before opening an account.

Understanding the difference between spot and futures XRP ETFs

A spot XRP ETF holds actual XRP tokens. The fund buys and stores the cryptocurrency, and the ETF's price tracks the real-time price of XRP in the market. Spot ETFs are simpler to understand because what you own is straightforward: a share of a fund that owns XRP.

A futures-based XRP ETF does not hold XRP directly. Instead, it holds XRP futures contracts — agreements to buy or sell XRP at a set price on a future date. The fund's price is meant to track XRP's price, but it does not always move in lockstep with the actual cryptocurrency. Futures ETFs are more complex and carry additional risks, including contango (a situation where the fund's costs rise over time and drag down returns) and tracking error (when the ETF's price diverges from XRP's actual price).

As of early 2024, spot XRP ETFs have not been approved in the United States. If you see an XRP ETF available, it is likely futures-based. This may change if the SEC approves a spot fund, so check current listings before you decide.

Steps to place an order for XRP ETF shares

Once you have an open brokerage account and have confirmed the fund is available, log in and navigate to the trading or order section. Search for the ETF by its ticker symbol — for example, if a spot XRP ETF is eventually approved, you would search for its assigned ticker. The fund's page will show you the current price, the expense ratio (annual fee), and recent performance.

Decide how many shares you want to buy. You can buy fractional shares at most brokerages, so you do not need to have enough cash for a whole number of shares. Enter the number of shares (or the dollar amount you want to invest), choose whether you want a market order (buy at the current price immediately) or a limit order (buy only if the price drops to a specific level), and review the order before submitting.

Market orders execute during market hours (9:30 a.m. to 4 p.m. Eastern Time on weekdays when the market is open). The order settles two business days later, meaning the shares appear in your account and you own them. You can sell the shares at any time the market is open.

Comparing XRP ETF options and costs

If multiple XRP ETFs become available, compare them on three main factors: the expense ratio (the annual percentage fee the fund charges), the fund's size (larger funds are usually more stable), and the fund's trading volume (higher volume means you can buy and sell more easily without moving the price).

Expense ratios for cryptocurrency ETFs typically range from 0.2% to 0.95% per year, though this varies. A 0.5% difference may seem small, but on a $10,000 investment it costs $50 per year. Over decades, that compounds. Check the fund's prospectus or fact sheet on the brokerage website to see the exact expense ratio.

Also check whether the fund has any trading restrictions or minimum investment amounts. Most ETFs do not, but some specialized funds do. Read the fund description before you buy.

Tax implications of owning an XRP ETF

When you sell XRP ETF shares for more than you paid for them, you owe capital gains tax on the profit. If you hold the shares for more than one year before selling, the gain is taxed as a long-term capital gain, which usually has a lower tax rate than short-term gains (profits from shares held one year or less).

Some XRP ETFs may distribute income or make other distributions to shareholders, which are also taxable events. The fund will send you a tax form (usually a 1099) at the end of the year showing what you owe. Keep records of when you bought and sold shares and at what price so you can calculate your gains accurately.

If you hold the ETF in a tax-advantaged account like a 401(k) or IRA, you do not owe tax on gains until you withdraw the money (or in some cases, never, depending on the account type). Check with a tax professional about your specific situation.

Risks and considerations before buying

Cryptocurrency prices are highly volatile. XRP's price can swing 10%, 20%, or more in a single day. An XRP ETF will move with that volatility, so your investment value can drop significantly in a short time. Only invest money you can afford to lose.

If you buy a futures-based XRP ETF rather than a spot fund, you face additional risks: the fund's price may not track XRP's actual price over time, and the fund's structure can work against you in certain market conditions. Understand what type of fund you are buying before you commit money.

Regulatory risk also matters. Cryptocurrency regulation is still developing. Changes in U.S. or international law could affect XRP's value or the fund's ability to operate. This is not a reason to avoid the investment, but it is a reason to understand the risk.

Frequently Asked Questions

Can I buy an XRP ETF in a retirement account like an IRA?

Yes, if your IRA provider's brokerage offers the ETF. Most major brokerages allow you to hold ETFs in IRAs. Check with your IRA provider to confirm they offer the specific XRP ETF you want. Gains in an IRA are not taxed until you withdraw the money.

What is the difference between buying an XRP ETF and buying XRP directly?

An ETF is simpler: you buy it through a regular brokerage account and do not need to manage a digital wallet or worry about security. Buying XRP directly requires a cryptocurrency exchange account and a wallet, but you own the actual cryptocurrency. ETFs charge annual fees; direct ownership does not, but you pay trading fees when you buy and sell.

How do I know if a spot XRP ETF has been approved?

Check the SEC's website or your brokerage's ETF search tool. If a spot XRP ETF is approved, it will appear in your brokerage's system with a ticker symbol. Financial news sites also report when major ETF approvals happen. As of now, no spot XRP ETF is available in the United States.

Can I set up automatic purchases of an XRP ETF?

Many brokerages offer automatic investment plans where you can buy a set dollar amount of an ETF on a regular schedule (weekly, monthly, etc.). Check your brokerage's website or call customer service to see if they offer this feature for the specific XRP ETF you want.

What happens if the brokerage that holds my XRP ETF goes out of business?

Your shares are protected by the Securities Investor Protection Corporation (SIPC), which covers up to $500,000 per account if a brokerage fails. Your ETF shares would be transferred to another brokerage. This protection applies to all ETFs held at SIPC-member brokerages.