XRP spot ETF will only come after a futures investment product like its Bitcoin counterpart
- Following spot BTC ETF approvals, expectation for an Ether and XRP ETF have grown.
- Market watchers says an XRP futures ETF would be key in paving way for a spot XRP ETF.
- Gemini exchange relisted XRP after it was appointed custodian for VanEck’s spot Bitcoin ETF
With memories of the landmark spot Bitcoin exchange-traded funds (ETFs) still fresh in the mind, cryptocurrency markets are already considering the possibility of an Ethereum and XRP spot ETF.
Also Read: Ethereum price eyes 5% swing south as SEC delays Grayscale spot ETH ETF
Spot XRP ETF hinges on futures investment counterpart
As chatter about an XRP spot ETF continues, Fox Business’s Eleanor Terrett says an XRP futures ETF must come, akin to how it played out in the spot Bitcoin ETF situation.
Reportedly, before the US Securities and Exchange Commission (SEC) approved the Bitcoin spot ETFs, it had concluded that the CME bitcoin futures market would suffice to provide surveillance for fraud and manipulation.
In order to have an $XRP spot ETF, there will first need to be a futures ETF.
— Eleanor Terrett (@EleanorTerrett) January 27, 2024
Part of getting the $BTC spot ETFs approved was the @SECGov concluding that the CME bitcoin futures market would suffice to provide surveillance for fraud and manipulation.
If $XRP gets a futures ETF… https://t.co/MPFVSherXK
With this, the market watcher says, “If XRP gets a futures ETF then it’s a step in the right direction to one day getting a spot.
As reported, one of the largest asset managers, BlackRock, recently decided to avoid an XRP ETF according to a Fox Business reporter.
Meanwhile, reports indicate that Ripple is on the lookout for a Senior Manager for Business Development in New York, with the selection criteria being that the ideal candidate must be able to drive cryptocurrency-related ETF initiatives with internal trading teams and relevant partners.
SCOOP: @BlackRock has no plans for a spot $XRP ETF, according to people with direct knowledge of the matter story developing
— Charles Gasparino (@CGasparino) January 18, 2024
One possible reason for this is that there is not adequate clarity on XRP’s status as a security or non-security. The SEC versus Ripple lawsuit’s outcome is expected to shed light on XRP’s status.
Elsewhere, Gemini exchange has hinted at potential Spot XRP ETF in Europe after regulatory advancements. Specifically, with multiple posts on X, the cryptocurrency exchange has sparked discussions and speculation among investors and enthusiasts about the potential launch of a Spot XRP ETF in Europe.
JUST IN: Gemini exchange (@Gemini) made 4 cryptic $XRP related posts in a row
— BlockNews.com (@blocknewsdotcom) January 22, 2024
Speculation around an EU-based Spot XRP ETF is rising pic.twitter.com/PnLwc5eTVe
This comes as Gemini pushes toward regulatory compliance and product offerings after securing approval as a Digital Asset Service Provider (DASP) in France.
It all sprouts from the Ripple versus SEC ruling, with the partial regulatory clarity encouraging Gemini to relist XRP on its trading platform. This reinstatement includes an expansion of trading pairs, which enhances the cryptocurrency's accessibility to traders.
Gemini's decision to relist XRP is accentuated by chatter about a possible Spot XRP ETF, with the exchange securing an appointment as VanEck's Spot Bitcoin ETF custodian. This means Gemini will safe keep VanEck's spot BTC ETF underlying assets, thereby providing an additional layer of security and trust for investors.
SEC vs Ripple lawsuit FAQs
Is XRP a security?
It depends on the transaction, according to a court ruling released on July 14:
For institutional investors or over-the-counter sales, XRP is a security.
For retail investors who bought the token via programmatic sales on exchanges, on-demand liquidity services and other platforms, XRP is not a security.
How does the ruling affect Ripple in its legal battle against the SEC?
The United States Securities & Exchange Commission (SEC) accused Ripple and its executives of raising more than $1.3 billion through an unregistered asset offering of the XRP token.
While the judge ruled that programmatic sales aren’t considered securities, sales of XRP tokens to institutional investors are indeed investment contracts. In this last case, Ripple did breach the US securities law and will need to keep litigating over the around $729 million it received under written contracts.
What are the implications of the ruling for the overall crypto industry?
The ruling offers a partial win for both Ripple and the SEC, depending on what one looks at.
Ripple gets a big win over the fact that programmatic sales aren’t considered securities, and this could bode well for the broader crypto sector as most of the assets eyed by the SEC’s crackdown are handled by decentralized entities that sold their tokens mostly to retail investors via exchange platforms, experts say.
Still, the ruling doesn’t help much to answer the key question of what makes a digital asset a security, so it isn’t clear yet if this lawsuit will set precedent for other open cases that affect dozens of digital assets. Topics such as which is the right degree of decentralization to avoid the “security” label or where to draw the line between institutional and programmatic sales are likely to persist.
Is the SEC stance toward crypto assets likely to change after the ruling?
The SEC has stepped up its enforcement actions toward the blockchain and digital assets industry, filing charges against platforms such as Coinbase or Binance for allegedly violating the US Securities law. The SEC claims that the majority of crypto assets are securities and thus subject to strict regulation.
While defendants can use parts of Ripple’s ruling in their favor, the SEC can also find reasons in it to keep its current strategy of regulation by enforcement.
Can the court ruling be overturned?
The court decision is a partial summary judgment. The ruling can be appealed once a final judgment is issued or if the judge allows it before then. The case is in a pretrial phase, in which both Ripple and the SEC still have the chance to settle.
Author
Lockridge Okoth
FXStreet
Lockridge is a believer in the transformative power of crypto and the blockchain industry.
