- XRP ETF needs CME-listed XRP futures.
- Clear regulations vital for ETF approval.
- XRP’s evolving legal status impacts investor sentiment.
During a recent episode of Tony Edward’s Thinking Crypto Podcast, James Seyffart, a well-recognized exchange-traded fund (ETF) analyst at Bloomberg, shared insights on the challenges facing the potential launch of an ETF tracking XRP. According to Seyffart, before an XRP ETF can become a reality, it is imperative that the Chicago Mercantile Exchange (CME), a leading global derivatives exchange, lists XRP futures.
Seyffart highlighted that this step would pave a smoother path for obtaining approval from the US Securities and Exchange Commission (SEC) for an ETF linked to XRP futures. The rationale behind this lies in the necessity for an ETF to have an underlying asset that determines its valuation. By introducing XRP futures on the CME, this valuation anchor would be established. However, Seyffart cast doubt on the likelihood of XRP futures being listed on the CME in the near future.
James Seyffart of Bloomberg explains.
— Tony Edward (Thinking Crypto Podcast) (@ThinkingCrypto1) August 14, 2023
Emphasizing the importance of well-defined cryptocurrency regulations, Seyffart advocated for Congress to establish specific guidelines for digital assets. Such regulations would facilitate exchanges like the CME in listing XRP futures, thereby clearing the way for an XRP ETF.
Interestingly, Seyffart noted a subdued demand for an XRP ETF, which he believed could influence ETF issuers’ enthusiasm in supporting such a product.
It’s noteworthy that crypto investment products centered around XRP have witnessed a remarkable 127% increase in assets under management this year. They also reported consistent inflows for the sixteenth consecutive week, with an infusion of $500,000 in the past week, as reported by CryptoGlobe.
Investor interest in XRP surged after a recent ruling by Judge Analisa Torres differentiated between sales to institutional investors and trades on exchanges, establishing that the token isn’t inherently a security. This led to cryptocurrency exchanges like Coinbase, Kraken, and Gemini relisting XRP, significantly enhancing its liquidity. However, the SEC has recently announced its intention to file an “interlocutory appeal” against Judge Analisa Torres’ ruling on Ripple’s programmatic XRP sales.
The SEC’s focus lies on clarifying whether certain sales and offerings of XRP by Ripple, particularly through cryptocurrency trading platforms and in exchange for services, align with the criteria outlined in the Howey test, a standard used to define securities.