Nate Geraci, the President of ETF Store, recently discussed the factors that could increase the chances of the U.S. Securities and Exchange Commission (SEC) approving XRP exchange-traded fund (ETF) applications. Asset managers such as Bitwise and Canary Capital have submitted applications to the SEC, aiming to offer institutional investors the opportunity to invest in XRP.
Factors That Could Increase the Chances of Approval
During an interview on the Thinking Crypto podcast, Geraci pointed out that if Donald Trump were to win the upcoming presidential elections, it could potentially enhance the SEC’s likelihood of approving XRP ETFs. He emphasized that Trump’s commitment to creating a crypto-friendly environment in the U.S. would likely raise the probabilities of approval.
Geraci acknowledged, however, that even if Trump were to win, it wouldn’t guarantee automatic approval for the XRP ETFs. He highlighted the current administration’s negative stance towards cryptocurrencies as a potential obstacle.
Challenges to Approval
Geraci indicated that even with a Trump victory, the approval process for the XRP ETFs wouldn’t be straightforward. The lack of XRP futures contracts currently trading on the Chicago Mercantile Exchange (CME) poses a significant issue. This absence is a notable disadvantage considering that the availability of CME futures markets has facilitated the approval of Bitcoin and Ethereum ETFs.
The SEC has approved Bitcoin and Ethereum ETFs by connecting spot and futures markets, as seen in the Grayscale case. However, the absence of a futures market for XRP leaves its approval uncertain.
Furthermore, Geraci mentioned that the SEC is likely to seek a surveillance-sharing agreement to prevent market manipulation before approving the XRP ETF. The lack of regulation for all exchanges trading XRP represents another significant challenge.
The ETF Store President argued that the best approach for the entire industry would involve Congress creating a regulatory framework that clearly defines which crypto assets are considered securities. On the other hand, Ripple co-founder Chris Larsen has shown less concern for Trump and instead supports Kamala Harris due to her understanding of innovative economics, having also made a $1 million donation in XRP.
The SEC’s approval process for the XRP ETF remains complex, particularly given the existing regulatory environment and market conditions. Investors should closely monitor political shifts and potential developments in regulations.
Please note that the information in this article is not investment advice. Investors should be aware of the high volatility and risks associated with cryptocurrencies and conduct their own research.
