USA Spot XRP ETF Approval Unlikely Before Election, Says Korean Securities Firm
The approval of a spot XRP ETF in the United States is unlikely before the upcoming November presidential election, according to Hong Sung-wook, a researcher at South Korean brokerage NH Investment & Securities. As reported by Business Post, Hong’s analysis points to the ongoing SEC lawsuit against Ripple Labs, the company behind XRP, as a key factor complicating the approval process for new crypto ETFs. His report also suggests that the election outcome could play a significant role in shaping the regulatory environment for crypto assets in the U.S., particularly if Donald Trump, a pro-crypto candidate, wins the election.
Current Status of the Spot XRP ETF Application
Earlier this year, Bitwise submitted an application for a spot XRP ETF with the U.S. Securities and Exchange Commission (SEC), marking a significant step towards offering investors direct exposure to XRP. However, approval of this application appears to be a long shot in the current regulatory climate. The SEC’s lawsuit against Ripple Labs has cast a shadow over the crypto asset, with legal proceedings focusing on whether XRP should be classified as a security.
The outcome of this lawsuit could impact not only Ripple but also the broader crypto market, as it may set a precedent for how other cryptocurrencies are regulated in the U.S. Until the lawsuit is resolved, the SEC is unlikely to approve new crypto ETFs related to Ripple, as any ruling against Ripple could undermine the legal foundation for offering XRP-based financial products.
Election Impact on Crypto ETF Approvals
Hong Sung-wook also highlighted the potential impact of the U.S. presidential election on the regulatory outlook for crypto ETFs. He noted that if Donald Trump—who has previously expressed pro-crypto views—were to win the election, there could be a shift in regulatory attitudes that might increase the likelihood of ETF approvals. Trump’s administration could potentially introduce crypto-friendly policies that would streamline regulatory processes and encourage the growth of crypto-based financial products.
On the other hand, a victory for the incumbent party or a candidate less favorable to cryptocurrencies might lead to a continuation or intensification of the SEC’s cautious stance. In such a scenario, obtaining approval for new crypto ETFs, including those based on XRP, could become even more challenging.
Ripple’s Legal Battle and Its Broader Implications
The SEC’s lawsuit against Ripple Labs has been ongoing since 2020, with the agency alleging that XRP is an unregistered security. Ripple has consistently denied these allegations, arguing that XRP should be classified as a currency and not subject to securities regulations. This legal dispute has become a focal point for the crypto industry, as the outcome could have far-reaching implications for how digital assets are regulated in the U.S.
If the court ultimately rules in favor of Ripple, it could pave the way for more XRP-related financial products, including ETFs, by removing regulatory obstacles. Conversely, a ruling against Ripple could limit the adoption and use of XRP, potentially hindering future ETF applications and other financial products tied to the cryptocurrency.
The Future of Crypto ETFs in the U.S.
The SEC has been reluctant to approve spot ETFs for digital assets, citing concerns over market manipulation, liquidity, and the need for investor protections. While several applications for Bitcoin and Ethereum ETFs are currently under review, the agency has yet to approve a spot crypto ETF in the U.S.
A favorable regulatory environment is essential for the approval of new ETFs, as it would provide clarity and confidence to both issuers and investors. As Hong Sung-wook pointed out, the upcoming election could play a pivotal role in shaping the direction of U.S. crypto regulations, potentially opening the door for new products if pro-crypto policies are implemented.
Conclusion
The approval of a spot XRP ETF in the U.S. is unlikely before the November election, as the SEC’s lawsuit against Ripple Labs and broader regulatory uncertainties cast a shadow over the prospects for new crypto ETFs. The outcome of the presidential election could significantly influence the regulatory landscape, particularly if a pro-crypto candidate like Donald Trump wins and enacts policies favorable to digital assets.
Until then, the future of XRP-based ETFs remains uncertain, with the approval process dependent on both the resolution of Ripple’s legal battle and the broader political climate. Investors and crypto enthusiasts will be watching closely as the election draws near, anticipating how the results may impact the regulatory outlook for crypto ETFs and the future of digital assets in the U.S.
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