The cryptocurrency community, particularly XRP enthusiasts, may have to temper their expectations for a spot XRP exchange-traded fund (ETF) as analysts predict its approval isn't imminent. This sentiment emerges against the backdrop of the United States Securities and Exchange Commission's (SEC) ongoing case against Ripple and the absence of an approved XRP futures ETF product.
Townsend Lansing, the head of product at CoinShares, opined that the likelihood of an XRP ETF materializing is slim unless the SEC explicitly agrees or is compelled to recognize that XRP is not a security. This perspective was shaped following a July 2023 ruling in the SEC’s lawsuit against Ripple, which stated that XRP is not a security when sold on retail exchanges, but the opposite holds true for institutional sales. The legal battle between the two entities is set to continue, with a trial scheduled for April 23.
The cautious outlook was echoed by Scott Johnsson, a general partner at Van Buren Capital, who sees the approval as "very slim," likely needing a shift in SEC leadership. CoinShares research analyst Max Shannon pointed out the decade-long journey to the approval of a spot Bitcoin ETF, suggesting a similarly extended timeline for XRP.
James Seyffart, a Bloomberg ETF analyst, shared a pessimistic view in a January 11 interview, citing the ongoing SEC case against Ripple as a major impediment. He also noted the lack of approved XRP futures ETFs in the U.S., contrasting the situation with Bitcoin and Ethereum.
The stringent requirements set by the SEC for approving a spot ETF, as observed in the case of Bitcoin funds, emphasize the need for a high correlation between futures and spot markets and robust surveillance sharing agreements to detect fraud and manipulation.
Despite these hurdles, the XRP community remains hopeful. Ripple CEO Brad Garlinghouse and BlackRock CEO Larry Fink have both addressed the topic, fueling speculation among supporters. However, a report by Gasparino on BlackRock's stance quelled some of the optimism.
As the industry eagerly awaits potential approvals for spot Ether (ETH) ETFs, the uncertainty surrounding an XRP fund's future illustrates the complexities of navigating the regulatory landscape in the world of cryptocurrency.
Disclaimer: Please note that the information provided in this article is based on the referenced research articles. It is essential to conduct further research and analysis before making any investment decisions. The cryptocurrency market is highly volatile, and investors should exercise caution and consult with financial professionals before engaging in cryptocurrency trading or investment activities.
