Regulatory Hurdles Cast Shadow on XRP ETF Approval Prospects, Hope Remains Distant

Author : Dency Emily | Published On : 25 Jan 2024

Despite growing optimism within the XRP community, the prospect of a spot XRP exchange-traded fund (ETF) securing regulatory approval faces significant challenges. Analysts point to several key factors contributing to this pessimistic outlook, including the ongoing legal battle between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs, the absence of an approved XRP futures ETF, and the SEC's recent cautious approach to the crypto space.

A primary obstacle to the approval of an XRP ETF is the unresolved lawsuit between Ripple and the SEC, scheduled for trial in April 2024. This legal dispute creates a substantial barrier, as the SEC is unlikely to greenlight any XRP-related products while the case remains unresolved.

Complicating matters further is the absence of an approved XRP futures ETF in the United States. Unlike Bitcoin and Ethereum, which have established futures markets, XRP lacks this crucial regulatory precedent. The SEC traditionally considers futures markets as a benchmark for evaluating the suitability of the underlying asset for an ETF.

Recent rumors about BlackRock contemplating an XRP-spot ETF have sparked some hope, but analysts caution that such plans would likely face rigorous regulatory scrutiny given the SEC's current stance on XRP. The ongoing legal battle between the SEC and Ripple adds an additional layer of uncertainty to any potential involvement by BlackRock.

While the approval of a spot Bitcoin ETF has been a significant development, attention has now shifted to the potential approval of a spot Ethereum ETF. Although some speculate that an XRP ETF could follow suit, most analysts remain skeptical, emphasizing the need for a clear resolution to the SEC-Ripple case.

Despite the optimism of certain XRP enthusiasts fueled by rumors, a more realistic assessment suggests that the journey towards an XRP ETF approval is likely to be protracted and challenging. Regulatory hurdles, coupled with ongoing legal uncertainties, cast a long shadow over the possibility of approval.