Ripples of uncertainty surround the potential launch of an XRP exchange-traded fund (ETF), according to Matthew Sigel, Head of Digital Asset Research at VanEck. In a recent interview, Sigel outlined key factors influencing ETF approval, highlighting two areas where XRP may fall short: customer demand and internal conviction from issuers.
The SEC’s Green Light Matters
For an ETF to launch successfully, several hurdles need to be cleared. First and foremost, the Securities and Exchange Commission (SEC) must grant approval. Additionally, support from market participants like exchanges and market makers is crucial. Issuers themselves need to be confident in the asset’s long-term potential, and there must be sufficient investor demand for the ETF.
Solana Shines Brighter Than XRP for ETF Potential
Applying this criteria to XRP, Sigel expressed concerns regarding customer interest and issuer confidence in the cryptocurrency. In contrast, Solana (SOL) appears to be a stronger candidate for a spot ETF, according to VanEck’s digital asset research head.
XRP vs. SOL: A Tale of Two Tokens
The debate on which cryptocurrency will be next in line for an ETF has intensified following the SEC’s approval of Bitcoin and Ethereum ETFs. Many industry players viewed XRP and SOL as frontrunners. Weeks after the SEC greenlit Ethereum ETF filings, VanEck itself filed for a Solana-based ETF, followed by a similar application from 21Shares.
Solana ETF Faces Hurdles Despite SEC Lawsuit
While there’s speculation that the SEC might reject Solana’s ETF application due to the absence of established futures markets, some believe approval could come under a new administration. This view is echoed by Bloomberg ETF analyst Eric Balchunas.
A Legal Tug-of-War: Security or Not?
The SEC’s stance on XRP’s classification adds another layer of complexity. The regulatory body considers coin a security based on its lawsuit against cryptocurrency exchanges Coinbase and Kraken. However, a federal court ruling suggests otherwise, declaring that coin itself is not a security, although certain XRP-related transactions might be.
VanEck Prioritizes Internal Belief and Investor Interest
Despite the legal ambiguity, VanEck maintains its position that SOL is a more viable candidate for an ETF than XRP. The reasoning centers on XRP’s perceived lack of internal backing and investor demand – two factors deemed critical for an ETF’s success.
Also Read: Horizon Protocol Opens Doors to XRP, Cardano (ADA), and Chainlink (LINK) Trading on Futures Market
Can the Community Boost XRP’s ETF Prospects?
Crypto influencer “Crypto Eri” believes the coin community can influence investor demand for an XRP ETF. Eri proposes a decentralized governance structure where XRP holders can vote on initiatives, potentially leading to a more competitive and attractive XRP Ledger (XRPL) ecosystem.
The Future of XRP ETFs Remains Unwritten
While the path to an XRP ETF appears uncertain, the XRP community’s efforts to foster a more robust ecosystem could play a significant role in influencing its future.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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