- Despite XRP’s recent legal clarity, there remains a notable absence of a spot exchange-traded fund (ETF) application for the cryptocurrency.
- The ongoing lawsuit between Ripple and the SEC continues to influence the prospects of an XRP spot ETF, despite a favorable court ruling for XRP.
Yassin Mobarak, the founder of Dizer Capital, has highlighted an unusual gap in the cryptocurrency investment landscape: the lack of a spot exchange-traded fund (ETF) application for XRP, despite recent legal clarity surrounding the asset.
The Puzzle of XRP’s ETF Absence
This observation comes in the wake of increased activity in the crypto ETF space, particularly following BlackRock’s recent application to the U.S. Securities and Exchange Commission (SEC) to roll out a spot-traded Ethereum fund. BlackRock, the world’s largest asset manager, had previously sought to launch a spot Bitcoin ETF, joining other financial giants like Fidelity Investments and Grayscale.
Given these developments, Mobarak finds it peculiar that XRP, a coin he describes as having unique legal clarity, has not yet seen similar advancements in the form of a spot ETF application.
XRP’s Legal Milestone and Ongoing Challenges
XRP’s journey through the legal system has been significant, especially with a major victory on July 13. A New York federal court rejected the SEC’s claim that XRP is a security, with Judge Torres declaring that XRP is not inherently a security. Despite this favorable ruling and the SEC not contesting this specific declaration during its appeal efforts, the ongoing lawsuit between Ripple and the SEC continues to cast a shadow over XRP’s prospects in the ETF arena.
The lawsuit is set to enter the remedies phase, where the court will determine the appropriate penalties for Ripple‘s alleged violation of securities laws through its XRP sales to institutional clients. While the SEC seeks a substantial fine of $770 million, Ripple may argue for a reduction by offsetting legitimate business expenses. The court’s decision in this phase is yet to be announced.
Implications for XRP’s Future
The absence of a spot ETF application for XRP, even amidst legal victories, suggests a cautious approach by financial institutions, likely influenced by the ongoing lawsuit. This scenario underscores the complexity of integrating cryptocurrencies into traditional financial products like ETFs, where legal and regulatory nuances play a pivotal role.
As the crypto industry watches these developments, the outcome of Ripple’s legal battle with the SEC and the eventual emergence of a spot ETF for XRP could set significant precedents for the broader digital asset market, influencing how cryptocurrencies are integrated into mainstream finance.
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