Why do Spot XRP ETFs need Futures ETF precedent?

In this post:

  • A spot XRP ETF requires a futures ETF precedent, similar to the path Bitcoin ETFs followed.
  • The SEC used the CME Bitcoin futures market for monitoring before approving Bitcoin spot ETFs, suggesting a similar requirement for XRP.
  • Ripple’s job posting for an ETF-focused role indicates interest in exploring XRP ETFs.

In the evolving landscape of cryptocurrency, the buzz around XRP ETFs is gaining momentum, but there’s a catch: the pathway to launching a spot XRP Exchange-Traded Fund (ETF) might necessitate the establishment of a futures ETF first. This strategic move isn’t just a whimsical step but a calculated maneuver in the complex world of crypto regulation and market readiness.

The Stepping Stone of Futures ETFs

Eleanor Terrett, a Fox Business analyst, recently stirred the pot by linking the approval of a potential XRP spot ETF to the precedent set by Bitcoin’s ETF journey. It seems that the Securities and Exchange Commission (SEC) plays a game of trust: they leaned on the CME Bitcoin futures market to monitor for any shady business before giving the green light to Bitcoin spot ETFs. The implication here is clear – before we see any XRP spot ETFs gracing the market, an XRP futures ETF might need to take the stage first.

Ripple’s recent job listing for a New York-based senior manager to spearhead “cryptocurrency-related ETF initiatives” adds fuel to this speculative fire. Coming hot on the heels of the SEC’s nod to 11 Bitcoin spot ETFs, this move has tongues wagging about the possibility of an XRP ETF making its grand entrance soon. Terrett’s tweet about XRP following Bitcoin’s ETF path is not just idle chatter; it’s a glimpse into the possible future trajectory of XRP in the ETF realm.

XRP ETF Approval: A Road Paved with Uncertainties

While these developments are intriguing, they’re far from a solid confirmation of an XRP ETF in the works. The road to ETF approval is fraught with regulatory hoops and complex scrutiny, particularly for a currency like XRP that currently lacks a robust futures market. The ongoing legal tussle between the SEC and Ripple only adds to the uncertainty, making the approval of an XRP ETF seem like a distant dream.

Analysts are cautious, pointing out that a spot XRP ETF is unlikely to see the light of day without significant shifts in the regulatory landscape. Townsend Lansing of CoinShares suggests that an XRP ETF might only become feasible if the SEC is compelled to acknowledge XRP as not a security. The current lawsuit’s outcome, where the judge’s ruling differentiated XRP’s status between retail and institutional sales, is a critical factor in this equation.

Scott Johnsson from Van Buren Capital and Max Shannon of CoinShares reflect on the decade-long journey to the approval of a Bitcoin spot ETF, suggesting a similar or even lengthier path for XRP. Bloomberg’s ETF analyst, James Seyffart, echoes this sentiment, calling an XRP ETF a “remote possibility.”

Despite this skepticism, the XRP community remains hopeful. Ripple CEO Brad Garlinghouse’s playful evasion when queried about an XRP ETF at the World Economic Forum and BlackRock CEO Larry Fink’s dismissive smile at a similar question have done little to dampen spirits. Franklin Templeton’s digital asset head, Sandy Kaul, hinted at more crypto ETF filings, further fanning the flames of anticipation.

Yet, the industry’s focus isn’t solely on XRP. The potential approval of spot Ethereum ETFs, with Bloomberg’s Eric Balchunas estimating a 70% chance, is also a hot topic. The fate of XRP ETFs, however, hangs in a delicate balance, dependent on the SEC’s stance post-lawsuit and the establishment of a credible futures market.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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