Following Bitwise’s application for an XRP exchange-traded fund (ETF) in October, the price of XRP struggles to rise. Closing at $0.66 at the end of last month, XRP has now dropped nearly 20% to trade at $0.53. This decline raises concerns about the ETF’s potential approval and market acceptance.
SEC’s Objection to Ripple
Among the reasons for the negative price performance is the adverse impact of the legal proceedings the U.S. Securities and Exchange Commission (SEC) is conducting against Ripple 
$1. The SEC’s forthcoming objection could diminish the chances of XRP receiving ETF approval, further complicating its market trajectory.
Kaiko: SEC Stance Complicates ETF Approval
Kaiko analysts assert that the SEC’s ongoing legal battle with Ripple, along with market manipulation concerns, complicates XRP’s ETF approval. The analysis indicates that “the probability of Grayscale transitioning from private placements to an XRP ETF is very low,” emphasizing the SEC’s primary concern of market manipulation.
Recently, Grayscale introduced an XRP trust, aiming to eventually convert it into an ETF. However, Kaiko expresses skepticism about the likelihood of this outcome given current market conditions.
The Role of the Futures Market
Analysts disagree on whether the lack of a futures market limits the chances of XRP receiving ETF approval. While some argue that the futures market is not essential, others believe it would be beneficial. Crypto-friendly SEC member Hester Peirce noted that a spot ETF could still be feasible without futures.
Peirce pointed out that even in the absence of a futures market, approval for a spot ETF could still be possible. However, this would bring it closer to products created for cryptocurrencies like Bitcoin 
$76,115 and Ethereum 
$2,261.
It remains to be seen how Bitwise and Grayscale will proceed. The SEC is expected to evaluate each product based on its unique “facts and circumstances.” In the successful case against the SEC for a Bitcoin spot ETF, approval occurred after the existing futures fund was established. However, differing market conditions may affect XRP’s situation.
The regulation of the ETF market and the SEC’s stance play a significant role in the financial product status of cryptocurrencies like XRP. These developments continue to create uncertainty about the future of the market, impacting stakeholders and potential market participants.
