Even if ETF issuers had the opportunity to offer a spot XRP ETF product, analysts believe that investors should not expect regulatory approval anytime soon. Analysts point out that the ongoing lawsuit by the Securities and Exchange Commission against Ripple and the lack of an approved XRP futures ETF product will seriously damage the chances of a spot XRP ETF approval.
XRP ETF Product Seems Unlikely
CoinShares‘ product manager Townsend Lansing explained that an XRP ETF product would not be possible unless the SEC is forced to accept or does accept that XRP is not a security. In July, during the SEC’s lawsuit against Ripple, the judge decided that XRP is not a security as a token but is considered one when sold to institutional buyers. The legal battle between the SEC and Ripple continues, with the trial hearing scheduled for April 23.
Scott Johnsson, a partner at Van Buren Capital, also sees this possibility as very weak and suggests that it would likely require new leadership at the SEC. Other analysts, like CoinShares research analyst Max Shannon, point out that it took over a decade to approve a spot Bitcoin ETF product.
Earlier this month, Bloomberg ETF analyst James Seyffart shared his lack of confidence in an imminent XRP ETF product. In an interview with Thinking Crypto’s Tony Edward on January 11, Seyffart said the ETF product is a distant possibility and does not believe it will happen this year, considering the SEC’s ongoing lawsuit against Ripple. Seyffart also noted that unlike Bitcoin and Ethereum, there is currently no approved XRP futures ETF product in the United States.
Regarding this issue, Johnsson argues that even if a financial exchange like CME were to list XRP futures tomorrow, the SEC would require years of high correlation between XRP futures and spot markets before approving a spot ETF product to ensure that surveillance-sharing agreements are sufficient to detect fraud and manipulation in the spot market.
Noteworthy Statements on ETF Products
Despite these developments, analysts’ pessimism has not dampened the hopes of more enthusiastic XRP investors in recent weeks. Last week, Ripple CEO Brad Garlinghouse gave evasive answers when asked during an interview at the World Economic Forum whether an XRP product was on the way, while a few days earlier, BlackRock CEO Larry Fink was seen smiling when he dismissed a similar question.
After Gasparino reported that BlackRock had no plans for a spot XRP ETF product, citing direct knowledge from individuals involved, hopes were cut short. Meanwhile, Sandy Kaul, head of crypto assets at Franklin Templeton, hinted in an interview on January 11 that they would offer their clients more opportunities to invest in crypto, predicting more applications from them at some point, which also raised hopes for other crypto ETF applications.
Whether an XRP fund comes or not, the industry remains focused on the potential approvals of spot Ethereum ETF products, and Bloomberg ETF analyst Eric Balchunas announced a 70% chance of approval in May.
