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XRP ETF holds slim chance of approval, Here’s why

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Analysts have poured cold water on the hopes of XRP enthusiasts eagerly awaiting the approval of bitcoin a spot XRP exchange-traded fund (ETF). Despite people talking about it, getting the green light from regulators for a spot XRP ETF is tricky. Experts suggest that legal and other reasons are making it difficult. The ongoing legal battle affects the XRP ETF
One major stumbling block highlighted by CoinShares’ head of product, Townsend Lansing, revolves around the United States Securities and Exchange Commission’s (SEC) case against Ripple. The SEC’s contention that XRP is a security, except when sold on retail exchanges, has created a regulatory quagmire. Lansing explained that for an XRP ETF to be feasible, the SEC must either be compelled to change its stance or agree that XRP does not qualify as a security.
The legal battle between Ripple and the SEC is going on and a trial is scheduled for April 23. However, the judge’s ruling in July 2023, asserting that XRP is not a security when sold on retail exchanges, has not provided the clarity needed for an ETF approval. Analysts, like Scott Johnsson from Van Buren Capital, are not very hopeful about the XRP ETF getting approved soon. They think the chances are very low, especially unless there is a change in the people leading the SEC.
CoinShares research analyst Max Shannon emphasized the prolonged timeline for approval, drawing parallels with the more than decade-long journey for a spot Bitcoin ETF. Bloomberg ETF analyst James Seyffart also expressed little confidence in the near-term approval of an XRP ETF, citing the ongoing SEC case against Ripple as a significant deterrent. Industry figures add to speculation
An absence in the XRP market further complicates matters – unlike Bitcoin and Ethereum, there are currently no approved XRP futures ETFs in the United States. According to Johnsson, even if XRP futures were listed on financial exchanges like the CME, the SEC would demand years of high correlation between XRP’s futures and spot markets before considering a spot ETF approval.
Despite analysts’ pessimism, some XRP enthusiasts hold onto hope, buoyed by recent statements from industry figures. Ripple CEO Brad Garlinghouse, in a January interview at the World Economic Forum, playfully avoided a direct response to thepossibility of an XRP ETF. BlackRock CEO Larry Fink’s dismissal of similar queries also left room for interpretation, though subsequent reports indicated that BlackRock had no immediate plans for an XRP ETF.
Franklin Templeton’s digital asset head, Sandy Kaul, hinted that the company could give clients more chances to invest in crypto. This has made some people hopeful that Franklin Templeton might file for crypto ETFs in the future. However, with the spotlight on the approval of spot Ether ETFs, currently rated with a 70% chance of approval by Bloomberg ETF analyst Eric Balchunas in May, the industry remains cautiously optimistic. Analysts recommend keeping expectations in check, as the intricate legal and regulatory hurdles are likely to keep the prospect at bay for the foreseeable future.
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