The possibility of exchange-traded fund (ETF) issuers offering a spot XRP ETF seems uncertain, with analysts advising investors not to expect regulatory approval in the near future.
This caution stems from the ongoing legal battle between the Securities and Exchange Commission (SEC) and Ripple, as well as the absence of an approved XRP futures ETF product, both of which significantly diminish the likelihood of a spot XRP ETF getting the green light.
Analysts speaking to Cointelegraph highlighted the ongoing SEC case against Ripple as a major obstacle. CoinShares’ Townsend Lansing pointed out that an XRP ETF would only be feasible if the SEC either is compelled to, or agrees to, acknowledge that XRP is not a security.
This is complicated by the fact that, in July, a judge in the SEC’s lawsuit against Ripple determined that while XRP as a token isn’t a security, it is considered one when sold to institutional buyers. The legal tussle is ongoing, with a trial set for April 23.
Scott Johnsson from Van Buren Capital sees the chances of an XRP ETF approval as “very slim,” possibly requiring a change in SEC leadership. CoinShares analyst Max Shannon noted the lengthy process it took to approve a spot Bitcoin ETF, spanning over a decade. Bloomberg ETF analyst James Seyffart also expressed doubt, especially in light of the SEC’s ongoing case against Ripple, deeming an imminent XRP ETF as a “remote possibility.”
Seyffart pointed out the lack of approved XRP futures ETFs in the U.S., unlike Bitcoin and Ethereum. Johnsson added that even if XRP futures were listed on a major exchange like the CME, the SEC would need years of data showing high correlation between XRP’s futures and spot markets. This data is crucial for ensuring that surveillance sharing agreements are adequate for detecting fraud and manipulation in the spot market, as was the case with spot Bitcoin funds.
Despite the analysts’ pessimism, some ardent XRP supporters remain hopeful. Ripple CEO Brad Garlinghouse playfully evaded the question about an XRP ETF during a January interview at the World Economic Forum. Similarly, BlackRock CEO Larry Fink’s reaction to a question on the topic by Fox Business’ Charles Gasparino was seen by some as a hint of potential developments, although he dismissed the question.
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