Ripple has continued to enjoy Judge Analisa Torres’ ruling in favor of the crypto company, with many use cases being touted for its native token XRP. The most recent use case to surface is a Spot XRP ETF, and Bloomberg analyst James Seyffart has been quick to consider the possibility of this happening.
How Possible is a Spot XRP ETF?
Seyffart, during a appearance on Tony Edward’s Thinking Crypto Podcast, explained that XRP would need to be listed on the Chicago Mercantile Exchange (CME) before the SEC can approve a Spot XRP ETF.
This argument stems from the SEC’s requirement for a significant size regulated market in the underlying asset. Relatively speaking, exchanges looking to list a Spot Bitcoin ETF in hopes of gaining approval rely on the fact that the CME Bitcoin futures, which happens to be a regulated market, offer a significant size to provide the necessary data and insights for any spot market.
Thus, Seyffart also believes that any Spot XRP ETF application should also meet the requirement that the token has a significant market size that can be used to provide all the data and insight needed to prevent fraud and market manipulation. To achieve this and easily gain SEC approval, he believes listing XRP futures on a prominent derivatives exchange like CME would be the right thing to do.
Despite his comments, Seyffart isn’t too optimistic about the launch of a Spot XRP ETF, saying it’s not something he “sees happening in the foreseeable future”.
Token price continues to fall as euphoria wanes | Source: XRPUSDT on Tradingview.com
Little or no demand is a hindrance
Another notable highlight of Seyffart’s comments was when he suggested there was little or no demand for an XRP ETF, something he believes is integral if we are to see an ETF filing.
However, there is reason to believe that this assumption is not entirely correct, as certain numbers point to increasing demand for XRP, particularly among institutional investors.
Last month, one report explained how XRP sales increased significantly this year, with over 2.22 billion XRP sold since the start of the year. Further, according to a more recent reportthe token registered institutional inflows of $0.5 million two weeks ago.
Ripple’s XRP Ledger is also competing against major Bitcoin and Ethereum networks, such as included an increase in daily transactions since the beginning of August. This record has allowed it to surpass market leader Ethereum in terms of daily transactions conducted on both networks.
Featured image from iStock, chart from Tradingview.com