XRP ETF Likely Next for SEC Approval, Says Kaiko

An XRP-focused exchange-traded fund (ETF) is more likely to receive approval from the Securities and Exchange Commission (SEC) than other recently proposed spot funds tracking major altcoins, according to a report released by market research firm Kaiko. The report highlighted that XRP's high liquidity and the recent approval of a leveraged XRP ETF by the SEC are key factors contributing to its front-runner position.

Kaiko noted that the spot volume for XRP on American exchanges has reached its highest level since before a long-running lawsuit in 2020 led to delistings. This increased liquidity, combined with the SEC's prior approval of a 2x leveraged XRP ETF by Teucrium Investment Advisors, strengthens the case for an XRP spot ETF.

Adam Morgan McCarthy, an analyst at Kaiko, stated that it is difficult to argue against allowing a spot product when there is already an active, highly leveraged ETF in the market. This sentiment underscores the growing acceptance of XRP as a viable investment option.

Several asset managers, including Bitwise, Grayscale, 21Shares, CoinShares, and Canary Capital, have applied to list spot XRP funds. These applications, along with others for ETFs based on Solana, Litecoin, Cardano, and Dogecoin, reflect the increasing demand for crypto investment products. According to Kaiko, a Solana-based fund is the next most likely to receive regulatory approval after an XRP ETF.

XRP, created by the founders of fintech company Ripple, has faced significant legal challenges. The SEC sued Ripple in late 2020, alleging that the company sold unregistered securities in the form of XRP. The lawsuit led to a significant drop in XRP's price, particularly during the bear market. However, the coin has since recovered after Ripple partially won its lawsuit with the SEC. A judge ruled in 2023 that programmatic sales of XRP on cryptocurrency exchanges to retail investors did not qualify as securities.

Despite the partial victory, the judge also ruled that $728 million worth of tokens for institutional sales constituted unregistered securities sales. Ripple and the broader crypto industry viewed the decision as a win, interpreting it as a step towards greater regulatory clarity.

In an effort to resolve the legal dispute, Ripple agreed to pay a $50 million fine to end the SEC investigation. This settlement marks a significant milestone in the ongoing regulatory battle between the SEC and the crypto industry.

XRP's recent trading price of $2.12 reflects a more than 15% increase over the past week, although it remains well below its all-time high of $3.40 per coin from 2018. The SEC's approval of Bitcoin ETFs last year, which generated more than $39 billion in net inflows, and the subsequent approval of Ethereum funds, highlight the growing acceptance of cryptocurrencies as investment assets.