Hopes for a spot XRP exchange-traded fund (ETF) are hanging in the balance, with analysts expressing skepticism about the likelihood of regulatory approval in the near future. The ongoing legal tussle between the United States Securities and Exchange Commission (SEC) and Ripple is casting a shadow over the prospects of an XRP ETF. CoinShares’ head of product, Townsend Lansing, emphasized the impracticality of such an ETF approval unless the SEC acknowledges that XRP is not a security.
A significant development in July 2023 saw a judge ruling that Ripple’s native token is not a security when sold on retail exchanges but attains that status when sold to institutional buyers. This legal ambiguity, coupled with the impending trial scheduled for April 23, continues to hinder the progression of an XRP ETF.
Van Buren Capital’s Scott Johnsson views the likelihood of approval as “very slim,” suggesting that it might necessitate a change in leadership at the SEC. CoinShares research analyst Max Shannon pointed out the historical precedent, noting that a spot Bitcoin ETF took over a decade to gain approval.
XRP ETF A Remote Possibility
Bloomberg ETF analyst James Seyffart added to the skepticism, describing the possibility of an imminent XRP ETF as a “remote possibility.” He attributed this outlook to the ongoing SEC case against Ripple and the absence of approved XRP futures ETFs in the United States, distinguishing it from Bitcoin and Ethereum.
Scott Johnsson argued that even if Ripple’s native token futures were listed on a financial exchange like the CME tomorrow, the SEC would likely require years of correlation data between its futures and spot markets. This precaution aims to ensure surveillance sharing agreements are robust enough to detect fraud and manipulation, akin to the scrutiny faced by spot Bitcoin funds.
Despite analysts expressing reservations, some enthusiasts find solace in recent comments from Ripple CEO Brad Garlinghouse, who playfully avoided confirming or denying the possibility of an XRP ETF during a World Economic Forum interview. However, reports dispelled hopes of a BlackRock-sponsored XRP ETF after CEO Larry Fink dismissed such plans.
Franklin Templeton’s digital asset head, Sandy Kaul, hinted at expanding opportunities for crypto investments, sparking optimism for potential future crypto ETF filings. Amidst the uncertainty surrounding XRP, the industry is closely watching the potential approval of spot Ether ETFs, with Bloomberg ETF analyst Eric Balchunas estimating approval odds at 70% in May.
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