An XRP-focused exchange-traded fund is more likely to receive approval than other recently proposed spot funds tracking other major altcoins, market research firm Kaiko said in a report released Monday.
XRP’s front-runner position comes because of the underlying token’s high liquidity, said Kaiko. Spot volume for XRP on American exchanges recently hit its highest level since before a long-running lawsuit in 2020 led to delistings, Kaiko noted in its report. XRP is the fourth-largest cryptocurrency by market cap.
Kaiko added that the SEC’s prior approval of a fund giving investors exposure to the coin also worked in XRP’s favor. U.S. asset manager Teucrium Investment Advisors launched a 2x leveraged XRP ETF earlier this month.
“It’s hard to argue against allowing a spot product when there’s already an active ETF like this, which is highly levered and more risky than a vanilla spot ETF,” Kaiko’s Adam Morgan McCarthy told Decrypt.
Bitwise, Grayscale, 21Shares, CoinShares, and Canary Capital have all applied to list spot XRP funds. The applications and others for ETFs based on Solana, Litecoin, Cardano, and Dogecoin, among other tokens, reflect issuers’ growing efforts to address demand for crypto investment products. Kaiko reported that a Solana-based fund was the next most likely after an XRP ETF to receive a regulatory greenlight.
XRP is a virtual coin created by the founders of fintech company Ripple. The SEC sued Ripple at the end of 2020, alleging that its team sold unregistered securities in the form of XRP.
The coin’s price nosedived—especially during the brutal bear market. But the coin has since made a comeback after Ripple partially won its lawsuit with the SEC. A judge in 2023 ruled that programmatic sales of XRP on cryptocurrency exchanges to retail investors did not qualify as securities.
Ripple—and the crypto industry as a whole—interpreted the decision as a win, despite the judge also ruling that $728 million worth of tokens for institutional sales constituted unregistered securities sales.
The fintech company last month agreed to pay a $50 million fine to end the SEC investigation.
XRP was recently trading at $2.12, up more than 15% over the past week, although it is well off its all-time high of record of $3.40 per coin from 2018, according to crypto data provider CoinGecko. XRP nearly matched that all-time peak back in January.
The SEC last year approved Bitcoin ETFs, which have been wildly successful, generating more than $39 billion in net inflows, according to U.K. asset manager Farside Investors. A few months later, the regulator approved Ethereum funds, which haven’t been met with the same amount of investor enthusiasm.
Edited by James Rubin
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