Bloomberg Analyst Explains the Hurdles for an $XRP ETF in the US

In a recent conversation on Tony Edward’s Thinking Crypto Podcast, James Seyffart, Bloomberg’s well-known exchange-traded fund (ETF) analyst, has suggested that before an $XRP ETF could materialize, he Chicago Mercantile Exchange (CME), one of the foremost derivatives exchanges globally, needs to list XRP futures.

The move, he suggested, would pave the way for a smoother approval process from the Securities and Exchange Commission (SEC) for an XRP futures ETF. The rationale behind this stems from the ETF’s inherent need for an underlying asset to anchor its valuation.

Listing XRP on the CME would effectively fill this void. Seyffart, however, was quick to pour cold water on the hopes of a Ripple spot ETF coming into being. He elaborated, that for the CME to list XRP futures ahead of a potential ETF launch, something he doesn’t see “materializing in the foreseeable future.”

Seyffart stressed the need for clear cryptocurrency regulations, saying that Congress should create specific rules for digital assets. These rules, he added, would make it easier for exchanges like the CME to list XRP futures, which would pave the way for an XRP ETF.

In a noteworthy aside, Seyffart observed a rather tepid demand for an XRP ETF, which he suggested would dampen the enthusiasm of ETF issuers in supporting such a fund.

Notably, as CryptoGlobe reported, crypto investment products focusing on XRP have seen their assets under management rise 127% so far this year, and reported their sixteenth consecutive week of inflows last week, with $500,000 being invested in them.

Investors have increased their bets on XRP after earlier this year, a recent ruling from Judge Analisa Torres in the case the U.S. Securities and Exchange Commission (SEC) brought against XRP differentiating between sales to institutional investors and on exchanges, noting the token itself isn’t necessarily a security.

The ruling saw a number of cryptocurrency exchanges including Coinbase, Kraken, and Gemini relist the token, significantly boosting its liquidity. Earlier this week, however,  the SEC revealed its intent to file an “interlocutory appeal” against Judge Analisa Torres’ recent ruling on Ripple’s programmatic XRP sales.

 The SEC is particularly keen to clarify the court’s interpretation of whether certain sales and offers of XRP by Ripple, especially over cryptocurrency trading platforms and in exchange for services, fell within the parameters defined by the Howey test, a standard for defining securities.

Featured image via Pixabay.

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