Despite the interest in exchange-traded funds (ETFs) linked to spot XRP, analysts are skeptical about the regulatory approval of such products anytime soon. The ongoing lawsuit between the U.S. Securities and Exchange Commission (SEC) and Ripple, coupled with the absence of approved XRP futures ETFs, poses significant hurdles to the likelihood of a spot XRP ETF being sanctioned.
Townsend Lansing, Head of Product at CoinShares, emphasized the impracticality of an XRP ETF unless the SEC acknowledges that XRP is not a security. The SEC's lawsuit against Ripple, initiated in July, alleges that XRP was a security when sold to institutional buyers. The legal battle continues, with a trial scheduled for April 23. Analysts, including Scott Johnsson from Van Buren Capital, believe the chances of approval are "very slim" and may require new leadership within the SEC.
Max Shannon, a CoinShares research analyst, pointed out that the approval process for a spot Bitcoin ETF took over a decade, adding to the skepticism surrounding the prospects of an XRP ETF. Bloomberg ETF analyst James Seyffart shared this sentiment, stating in an interview that an XRP ETF is "very unlikely" due to the ongoing SEC lawsuit against Ripple. Seyffart also noted the absence of approved XRP futures ETFs in the United States, unlike Bitcoin and Ethereum.
Johnsson raised concerns about the need for an extended period of high correlation between XRP futures and spot markets before the SEC would consider approving a spot XRP ETF. He highlighted the necessity for monitoring agreements to effectively detect fraud and spot market manipulation. Despite the pessimism among analysts, some XRP enthusiasts have expressed optimism, citing comments from Ripple CEO Brad Garlinghouse and BlackRock CEO Larry Fink as encouraging signs. Franklin Templeton’s Head of Digital Assets, Sandy Kaul, also hinted at potential cryptocurrency ETF filings in the future.
While the fate of an XRP ETF remains uncertain, the cryptocurrency industry is closely watching the potential approval of a spot Ethereum ETF, with Bloomberg ETF analyst Eric Balchunas estimating a 70% chance of approval in May.
