A market-driven solution
Ripple’s imminent spot XRP exchange-traded fund (ETF) is creating major buzz in crypto circles as greater numbers of asset managers get behind it.
Spot EFTs are considered high value because investors are exposed directly to the underlying asset.
They hold actual XRPs in regulated storage, rather than in stock, futures or derivatives.
A key point about spot EFTs, which are traded on major stock exchanges, is that they allow people to buy XRP via traditional brokerage institutions.
This negates the need to store cryptocurrency they have bought directly.
Investors therefore feel more confident, particularly since they are also offered the Ripple token’s market price in real time.
XRP ETFs are also simple to understand and driven by the market, whereas futures-based ETFs, for example, are prone to high levels of volatility and are notoriously speculative.
It is now well known that the shift from speculation to adoption is spurring blockchain adoption to greater heights.
XRP’s growing acceptance in real-world financial structures bears testament to this.
With more investors and major banks embracing the token, the Ripple to USD price is proving one to watch.
Asset managers rally
Despite the U.S. Securities and Exchange Commission (SEC) still in the process of ruling on several spot XRP ETFs, the enormous appetite for the offering is clear.
As many as seven notable asset managers recently filed updated S-1 statements for spot XRP ETFs.
The S-1 form is an SEC requirement that governs initial registration of any new security by US-based firms.
In most cases they are filed by companies when they plan to unveil an Initial Public Offering.
Cash or in-kind redemptions replace cash-only mechanisms in the updated S-1 forms.
The seven asset managers are big-hitters in the market – Canary, CoinShares, Grayscale, Bitwise, Widom Tree, Franklin and 21Shares.
Analysts like Nate Geraci [https://novadius.com/about/ describe the development as “a very good sign” and believes SEC approval is “getting close”.
XRP flexes muscle
The success of spot XRP ETFs ultimately will depend on the strength of XRP itself.
Ripple’s stock is undoubtedly rising.
One of the biggest contributors to its surge is seeing off the SEC in court.
The SEC alleged that Ripple was offering unregistered security offerings through the sale of XRP.
The court disagreed, ruling that the sale of the token on public exchanges did not categorise it as a security.
This would only be the case if the case was sold to institutional investors.
Another factor in Ripple’s favour is that it already has made a name for itself as a possible solution to digital transactions and ownership by virtue of nature as a real-world crypto token.
The company has been clear in its messaging that it wants to erode the market dominance of Swift by making cross-border transfers significantly lower.
While the expected approval of spot XRP ETFs may not be a silver bullet for Ripple as it seeks to continue rising through the crypto ranks, it certainly will help bolster its position.
