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Ripple Spot ETF Timing: When Will SEC Approve XRP Fund Launch?

Last Updated June 10, 2024 1:58 PM
Giuseppe Ciccomascolo
Last Updated June 10, 2024 1:58 PM

Key Takeaways

  • The approval of Bitcoin and Ethereum ETFs has investors looking to see which cryptocurrency might be next.
  • The market expects ETFs based on Solana and Ripple as the next ones in the crypto world.
  • However, Ripple’s ongoing lawsuit with the SEC is a major roadblock for an XRP ETF approval.

This year’s green light for spot Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) in the US has fueled speculation about which other cryptocurrencies’ ETFs will be the next to receive regulatory approval. Many experts think Ripple and Solana may be the next ones.

But, at least for the company behind XRP, a major roadblock exists: the ongoing legal battle between Ripple and the Securities and Exchange Commission (SEC) over allegations of unregistered securities sales. This unresolved lawsuit could significantly delay, or even prevent, the approval of an XRP ETF.

A Ripple ETF Is “Inevitable”

While the market expects one between Solana and Ripple to be the next ETF to receive approval by the SEC, Ripple’s CEO, Brad Garlinghouse, has stated  that an ETF for various crypto assets is “inevitable.” He predicted that many other cryptocurrencies will soon see similar fund offerings. He expressed optimism about the crypto market reaching a $5 trillion valuation, bolstered by the recent approvals of spot Bitcoin and Ethereum ETFs in the United States.

Garlinghouse emphasized his belief in a diverse range of successful projects within the cryptocurrency space, each focusing on different aspects of decentralized finance and the digital asset industry.

But he’s not the only crypto-famous face to have shared this positive sentiment over further ETF approvals. Earlier this year, Blackrock’s CEO Larry Fink was questioned about the potential release of an XRP ETF by the world’s largest asset management firm.

Although Fink declined to comment, his response fueled speculation within the XRP community that Blackrock might be considering such a financial product.

Ripple vs SEC

The United States Southern District Court of New York adjudicated the SEC vs. Ripple case . In 2020, the US Securities and Exchange Commission (SEC) accused Ripple, the blockchain developer behind the XRP cryptocurrency, and two of its top manager, of raising over $1.3 billion through an unregistered securities offering in 2013.

Ripple countered these allegations by citing past comments from an SEC director to argue that XRP should not be classified as a security. The SEC contended that Ripple failed to file the registration documents. These are necessary documents for companies seeking to raise capital from the public. The regulator further claimed that Ripple “created an information vacuum,” selectively disclosing information at its discretion.

On July 13, 2023, the court ruled that XRP, like all cryptocurrencies, is not a security when sold to the public on an exchange. Still, it is considered a security when sold to institutional investors. By October 2023, the SEC dropped all charges against Ripple’s executives. However, it continued to pursue remedies for the alleged unregistered securities sales.

In May 2024, the SEC submitted its final response regarding the sought remedies. The watchdog asserted that Ripple’s profits were ill-gotten. And it claimed that the company’s defenses did not align with the evidence presented against it.

Stablecoin Before ETF

The future of a Ripple ETF remains uncertain. However, Ripple President Monica Long fueled speculation about the potential launch of a Ripple stablecoin later this year.

In an interview , Long provided insights into the development and prospective launch of Ripple’s stablecoin. Although specific details about the launch date and features aren’t public yet, she hinted that the crypto community could expect a possible release by year-end.

Long emphasized the significant role of stablecoins in the volatile crypto market. She noted their multi-billion dollar market capitalization. But she also highlighted their reliability as a payment option for users seeking to move and store assets securely.

This announcement came during the XRP Las Vegas  conference held on May 3-4. Ripple’s Chief Technology Officer, David Schwartz, shared updates on the company’s upcoming integrations. These include the XRP Ledger’s automated market makers (AMMs), the lending protocol, and the development of Ripple’s stablecoin.

Ripple’s proposed stablecoin will be backed 1-to-1 by US dollar deposits, US government bonds, and other low-risk investments. The XRP community responded  enthusiastically to the news of the stablecoin’s development.

According to the company’s recent announcement, the introduction of a stablecoin aims to enhance use cases, liquidity, and opportunities for developers and users. This would provide a more reliable alternative to existing stablecoins like Tether (USDT) and Circle (USDC).

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