- James Seyffart, a renowned Bloomberg ETF analyst, believes the Chicago Mercantile Exchange (CME) must list XRP futures before the SEC approves an XRP ETF.
- He insists that the present regulatory setting cannot support an XRP ETF, advocating for congressional intervention to provide clarity.
The Pathway to XRP ETF: CME’s Integral Role
In a riveting episode of Tony Edward’s Thinking Crypto Podcast, James Seyffart, Bloomberg’s ETF luminary, offered incisive perspectives on the journey to achieving an XRP exchange-traded fund (ETF). Seyffart contends that a series of dominoes must fall into place before the crypto realm can witness the launch of an XRP ETF, and the Chicago Mercantile Exchange (CME) holds the initial piece.
James Seyffart of Bloomberg explains.
— Tony Edward (Thinking Crypto Podcast) (@ThinkingCrypto1) August 14, 2023
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Why CME’s Listing Matters
The derivative exchange, CME, plays a pivotal role in this equation. Seyffart’s thesis gravitates around the need for CME to catalog XRP futures, framing it as a precondition for SEC’s nod of affirmation on an XRP ETF. This step is non-negotiable. An ETF, by design, requires an underlying asset to mirror, positioning XRP on the derivative exchange as the ideal candidate.
Diving deeper, Seyffart voiced skepticism on the prospects of a Ripple spot ETF emerging in the near future. To decode his sentiment, it’s imperative to comprehend the difference between spot and futures ETFs. While a spot ETF tracks the actual asset (like XRP), a futures ETF, on the other hand, follows futures contracts of the asset. Seyffart stressed,
“CME would have to list XRP futures before a futures ETF would launch. And I can’t imagine them allowing a spot Ripple ETF anytime soon.”
Congressional Clarity: The Need of the Hour
Augmenting this narrative is the broader landscape of regulatory ambiguity. Seyffart opines that the SEC, given the current regulatory blueprint, is hands-tied to sanction an XRP ETF. He accentuated the urgency for the U.S. Congress to intervene, carving out laws tailored for the cryptocurrency domain. Such legal clarity would not only pave the way for derivative exchanges like CME to enlist XRP futures but would also streamline the path for SEC’s eventual ETF approval.
Yet, in an ecosystem where demand drives innovation, Seyffart highlights a significant deterrent: the palpable lack of appetite for an XRP ETF. In its absence, ETF issuers find scant motivation to champion the cause for an XRP-centric ETF.
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