Is XRP ETF On Cards If Ripple Wins XRP Lawsuit?

James Seyffart, a prominent ETF analyst at Bloomberg, has emphasized the necessity of XRP inclusion on a derivative platform before any prospects of an XRP ETF can materialize. During a recent segment on Thinking Crypto Podcast, Seyffart shed light on the conditions that need to be fulfilled before cryptocurrency enthusiasts could witness the introduction of a XRP ETF.

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Crucial Role of CME Role in XRP ETF

Seyffart’s argument centers around the pivotal role of the Chicago Mercantile Exchange (CME), a significant derivatives exchange, in facilitating the launch of XRP futures contracts. 

He posits that the availability of XRP futures on the CME could pave the way for the eventual approval of an XRP futures ETF by providing a tangible underlying asset for tracking. The analyst remarked:

“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.”

Congressional Action, Regulatory Clarity And Ripple Vs SEC Battle

This perspective from Seyffart follows his earlier observation that the SEC’s existing regulatory framework lacks the capacity to accommodate an XRP ETF. He reiterated this stance on the podcast, emphasizing the need for explicit legislation from the US Congress concerning cryptocurrencies.

Seyffart expressed:

“Basically what it needs to happen and we keep going back, we need clarity. Congress needs to come in and issue laws.”

Significantly, well-defined laws about cryptocurrencies would create a more conducive environment for CME to list XRP futures, thereby enhancing the prospects of obtaining eventual SEC approval for an XRP ETF. The ongoing XRP Vs SEC lawsuit will largely impact the stance of US lawmakers towards crypto. 

Ripple is not alone in its fight against US SEC.  Largest crypto exchange in US Coinbase was also recently sued by SEC and result is pending in Coinbase Vs SEC case. 67 crypto tokens with a combined market cap of $100 billion were called as securities by the US SEC.

Recently first crypto regulatory framework in US was approved House Financial Services Committee in a 35-15 vote.

Demand and Issuer Perspective

In a separate vein, Seyffart also touched upon the lack of significant demand for an XRP ETF. Given the absence of substantial demand, ETF issuers are less incentivized to pursue the development of an XRP ETF.

Gemini following @coinbase and listing #XRP. Been asked a few times in last few weeks about an XRP ETF. Don't think there's enough to launch an XRP ETF with this SEC. And there seems to be essentially zero demand from issuers to try https://t.co/t3PQeqbKvI

— James Seyffart (@JSeyff) August 10, 2023

Ultimately, the Bloomberg ETF analyst contends that the listing of XRP futures on the CME is a crucial precursor to any potential launch of an XRP ETF approved by the SEC. He also emphasizes the importance of regulatory clarity through Congressional action.