Grayscale's Head of Research Zach Pandl stated on The XRP Pod that XRP spot ETFs could absorb approximately 5-6% of the circulating supply if institutional adoption follows patterns seen with Bitcoin and Ethereum ETFs. The prediction is based on the ETF custody mechanism, where issuers must acquire and hold underlying XRP to back investor shares, effectively removing tokens from active market circulation. This assessment comes as institutional interest in XRP-linked products has been increasing, with investment banking firm Morgan Stanley recently disclosing XRP ETF exposure in its latest 13F filing with the U.S. Securities and Exchange Commission.
ETF Custody Mechanism Reduces Available XRP Supply
Pandl explained that when investors purchase ETF shares, issuers are required to acquire and hold the underlying XRP to back those shares. These tokens are then stored with custodians, reducing the amount freely available on exchanges. As inflows into XRP ETFs grow, the supply locked in custody increases correspondingly.
Bitcoin and Ethereum have experienced this dynamic since their spot ETF approvals, with institutional inflows shifting portions of supply into long-term custody. Pandl noted that XRP's large circulating supply means a 5-6% reduction in liquid tokens would translate into billions of XRP taken off the open market.
Morgan Stanley Discloses XRP ETF Positions in SEC Filing
Morgan Stanley disclosed exposure to XRP-focused exchange-traded funds in its latest 13F filing with the U.S. SEC. The filing included positions in the Volatility Shares XRP ETF and Grayscale's GXRP product.
Institutional interest in XRP-linked products has been increasing, with weekly inflows recently hitting a 2026 high. XRP ETFs are being utilized by pensions, asset managers, and registered investment advisors to gain exposure without directly holding the underlying asset.
FAQ
What percentage of XRP supply could ETFs absorb according to Grayscale's research?
Grayscale's Head of Research Zach Pandl stated that XRP spot ETFs could ultimately absorb around 5-6% of the circulating supply if adoption follows patterns observed with Bitcoin and Ethereum ETFs.
Which institutional investor disclosed XRP ETF holdings in recent SEC filings?
Morgan Stanley disclosed exposure to XRP-focused exchange-traded funds in its latest 13F filing with the U.S. SEC, including positions in the Volatility Shares XRP ETF and Grayscale's GXRP product.
How do XRP ETFs affect the available supply of tokens?
When investors buy XRP ETF shares, issuers must acquire and hold the underlying XRP in custody to back those shares. These tokens are stored with custodians and removed from active circulation on exchanges, reducing the freely available supply in the market.
