- Bloomberg analyst James Seyffart talked about the possibility of an XRP exchange-traded fund (ETF).
- He added that the CME should first proceed for an XRP futures ETF before heading for the spot XRP ETF.
Just last month, the U.S. District Court of New York ruled that Ripple’s XRP sales to retail players do not constitute securities. Over the last month, there have been several discussions on how this would lead to increased adoption of the XRP cryptocurrency.
Interestingly, the talks surrounding XRP-based exchange-traded funds (ETF) have also started catching up. During the recent episode of Tony Edward’s Thinking Crypto Podcast, Bloomberg ETF analyst James Seyffart talked about the possibility of an XRP exchange-traded fund (ETF).
A cryptocurrency exchange-traded fund (ETF) is a fund that tracks the value of digital tokens. The ETF’s share price changes daily due to investor buying and selling. Similar to regular stocks, crypto ETFs also trade on a daily basis. ETFs offer advantages like cost-effectiveness, diversification, and the delegation of complex tasks like selecting crypto tokens to experts.
Specifically, Seyffart emphasizes the prerequisites that need to be satisfied before the cryptocurrency community can witness the realization of an XRP ETF. As we know, the U.S. Securities and Exchange Commission has been reluctant on approving a spot crypto ETF in the market citing major risks of investor manipulation. However, it has been comfortable with crypto futures ETFs such as Bitcoin futures ETFs or Ether Futures ETFs.
CME Should First Bring XRP Futures ETFs
Seyffart asserted that for an ETF based on XRP to gain approval, it’s necessary for the derivatives exchange Chicago Mercantile Exchange (CME) to introduce XRP futures contracts. This move would establish the foundation for an ETF endorsement, according to the analyst.
This step is important as the ETF requires an underlying asset for tracking, and XRP futures on the derivatives exchange would fulfill this requirement. Seyffart also pointed out the improbability of a Ripple spot ETF becoming a reality within the cryptocurrency community. He said:
First of all, CME would have to list XRP futures before a futures ETF would launch. And I can’t imagine them allowing a spot Ripple ETF anytime soon
This perspective from the ETF expert emerges following his earlier observation that the Securities and Exchange Commission (SEC) lacks the ability to green-light an XRP ETF.
Seyffart’s reasoning centers on the existing regulatory structure’s inability to accommodate an XRP ETF. He reiterated this stance during the podcast. The Bloomberg analyst highlighted that the ongoing debates will persist unless the US Congress establishes dedicated cryptocurrency laws. Seyffartsaid.
Basically what it needs to happen and we keep going back, we need clarity. Congress needs to come in and issue laws.
With laws in place that offer clarity on crypto rules, it will be easier for exchanges to list XRP futures ETFs.
Interestingly, the Bloomberg analyst also noted that there’s not enough demand for an XRP exchange-traded fund.
