Highlights are blown, is there a way to properly expose white without underexposing everything else?
Depends on the scene. If the range of tones (dynamic range) is greater than what your camera can capture (dynamic range), then you won't be able to expose for everything without loosing highlights or shadows. As the photographer, you get to make the choice.
Now, in this scene, I don't think it exceeds what your camera is capable of, but it does have some very bright whites. So if you want to prevent those from blowing out, you need to reduce the exposure, which would make the whole image darker...but that's part of the choice. Now, keep in mind that it's often a fine line between blown out, and just being white in the photo. The towel is white...so if you want to actually see the detail/texture of it, you probably have to underexpose it a little bit...which of course would mean slightly underexposing everything else.
That's why it's tricky to use bright white in a photo like this. It would be easier to use a towel that isn't so bright. Or, you could try to prevent some light from hitting the towel, while not preventing light from hitting the baby.
In this shot, I don't think it's a big issue that some of the towel is blown out. The baby is the subject and they are well exposed, and that's what counts. If this was an ad for towels...then we'd have an issue to fix.
Also, how to you convert to sRGB?
What software are you using?