- XRP ETF approval likely due to high token liquidity and existing leveraged ETF precedent.
- XRP trading volume on U.S. exchanges reached highest levels since pre-lawsuit days in 2020.
- Multiple firms including Bitwise, Grayscale, and 21Shares have filed applications for spot XRP ETFs.
Market research firm Kaiko released a report on Monday stating that an XRP-focused exchange-traded fund has a higher chance of receiving approval compared to other proposed spot funds for major altcoins. This assessment is based primarily on XRP’s strong liquidity metrics, with spot trading volume on American exchanges recently reaching its highest level since before the 2020 SEC lawsuit that led to widespread delistings.
Kaiko highlighted that XRP, currently the fourth-largest cryptocurrency by market cap, benefits from the SEC’s previous approval of a fund giving investors exposure to the coin. Teucrium Investment Advisors recently launched a 2x leveraged XRP ETF, creating a favorable precedent for spot ETF applications.
Multiple Applications Await Decision
“It’s hard to argue against allowing a spot product when there’s already an active ETF like this, which is highly levered and more risky than a vanilla spot ETF,” Adam Morgan McCarthy of Kaiko told Decrypt. Several major firms including Bitwise, Grayscale, 21Shares, CoinShares, and Canary Capital have submitted applications for spot XRP funds.
The report also suggested that a Solana-based fund would be the next most likely candidate for regulatory approval after XRP. These applications are part of a broader industry push to meet growing demand for cryptocurrency investment products following the successful launches of Bitcoin ETFs.
Ripple‘s Legal Status Improves
XRP was created by the founders of fintech company Ripple, which faced a lawsuit from the SEC in late 2020 alleging that its XRP token sales constituted unregistered securities offerings. The cryptocurrency’s price suffered significantly during this period, particularly during the market downturn.
A judge ruled in 2023 that programmatic sales of XRP on cryptocurrency exchanges to retail investors did not qualify as securities, though institutional sales worth $728 million were deemed unregistered securities. Last month, Ripple agreed to pay a $50 million fine to conclude the SEC investigation.
XRP currently trades at approximately $2.12, showing a 15% increase over the past week, though it remains below its all-time high of $3.40 from 2018. The token nearly approached this record in January of this year, according to data from CoinGecko.
The SEC previously approved Bitcoin ETFs, which have generated over $39 billion in net inflows according to Farside Investors. Ethereum funds were approved subsequently but haven’t attracted the same level of investor interest.
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