[{"category":{"name":"BitScreener Exclusive","exported_url":"bitscreener-exclusive"},"id":"8b3bace8-234c-4788-a4f0-1945161a2dc9","updated_at":"2024-05-18T09:38:56.510165+00:00","account":{"firstName":"Mason","lastName":"Thompson"},"description":"Explore the potential of an XRP ETF in the constantly developing crypto market. Discover its benefits, the impact of the SEC vs. Ripple lawsuit as well as alternatives like ETPs. Dive in for the latest insights!","sapo":"As the crypto world buzzes with the recent approval of a Bitcoin ETF, attention shifts to XRP, a major player in cross-border payments. Will 2024 bring the launch of an XRP ETF? Hurdles, hopes, and alternatives in our in-depth analysis.","title":"XRP ETF: The Next Big Basket in Crypto?","content":"

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The cryptocurrency market continues to evolve rapidly as more investors are seeking new avenues to participate in this DeFi. Investors are increasingly interested in Exchange-Traded Funds (ETFs) which reflect the value of specific digital currencies. While Bitcoin ETFs have finally secured approval from regulatory authorities, the question arises if investors will see an XRP ETF in 2024?

What is ETF

Source: Binaryoptions

XRP: A Major Player in Cross-Border Payments

XRP is the native token of Ripple which is a prominent force in cross-border payments. Ripple aims to revolutionize international transactions by offering faster and cheaper alternatives to traditional banking methods. As Ripple's global adoption is growing, investors are showing more interest in XRP and want to access it in a regulated form.

Ripple's cross border payments

Ripple's cross border payments. Source: Ripple

Benefits of an XRP ETF

An XRP ETF would function similarly to the ETFs of other cryptocurrencies. This ETF will hold a basket of XRP tokens which allow investors to buy shares of the total holdings with ease. This approach of buying shares offers multiple benefits.

Enhanced Accessibility

ETFs trade on stock exchanges which makes them easy to buy for traditional investors. This method is easy in comparison to buying individual XRP tokens on crypto exchanges which involve complex procedures and security issues. Thus, buying ETFs is a streamlined and user-friendly experience.

More Diversification

An XRP ETF eliminates the risk associated with price fluctuations of a buying single XRP token. It offers a convenient way to gain exposure and diversify benefits associated with XRP without the need to buy individual tokens.

Extra Security

Unlike other crypto exchanges, ETFs are regulated investments, which offer great security. The ETF provides peace of mind to investors due to high regulation.

ETF Roadblock: The SEC vs. Ripple Lawsuit

The biggest hurdle for XRP ETF is the ongoing lawsuit between Ripple Labs and SEC. The SEC alleges that XRP is an unregistered security, and this move casts a shadow over the regulatory status of XRP. Until the court reaches a final verdict, the future of the ETF remains unknown.

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A Glimpse of Hope: Approval of Bitcoin ETF

Despite an ongoing lawsuit against Ripple Labs, recent approval of the Bitcoin ETF has opened doors of hope for the XRP ETF. The Court's final decision is expected soon, all investors are hopefully waiting for a verdict in favor of Ripple. Also with clearer regulations regarding XRP’s classification will definitely open doors for future ETF applications. Industry experts and Ripple’s leadership have hinted at the launch of XRP ETF in 2024 or 2025. However, it is important to note that these are just speculations, and the actual timeline for XRP ETF is still unknown and will be dependent on the court's decision.

Alternative to ETF: The ETP Option

While Investors are eagerly waiting for the XRP ETF, ETP is another option that should be explored. Exchange Traded Products (ETPs) function almost similar to an ETF but with few basic differences, which are explained below.

Underlying Assets

ETFs usually hold the assets they track such as stocks or bonds, directly. On the other hand, ETPs do not hold assets directly. For example, an Exchange-Traded Note (ETN) is a type of ETP which functions as debt security issued by a bank. Banks promise returns based on performance of assets like XRP, but investors do not own XRP itself.

High Regulation

ETFs are subject to stricter regulations compared to ETPs, which results in higher transparency and low risk.

Price Tracking

Usually an ETF's price closely tracks the value of its assets. However, the price of an ETP may deviate slightly due to different factors i.e. issuer creditworthiness or embedded fees.

In simple words see an ETF as a transparent basket where users indirectly own portions of actual assets like bonds and stocks. But the structure of an ETP basket can vary and you will be owning contents indirectly.

The future of the XRP ETF remains uncertain as SEC casts shadow on XRP. All investors interested in XRP should closely monitor the lawsuit progress. For now, the XRP ETP offers a regulated option, but investors should research the specific product that they are interested in and its underlying regulations before making investment decisions. While there are reasons for optimism based on Bitcoin ETF approval, investors should adopt a cautious approach and closely monitor legal developments and global market trends before making any decisions.

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XRP ETF: The Next Big Basket in Crypto?

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