- The SEC will review three XRP ETF applications
- JPMorgan predicts XRP ETFs to draw up to $8 billion in inflows.
Bitwise just cleared a huge hurdle towards launching a spot XRP exchange-traded fund — and potentially bagging part of $8 billion in inflows.
The Securities and Exchange Commission has acknowledged the asset manager’s application to launch an XRP ETF, making it the third applicant to pass the important milestone.
“The likelihood of an XRP ETF approval is high,” Lucas Sorlini, product head at institutional crypto platform Northstake, told DL News. Sorlini spoke about XRP ETFs in general, not Bitwise’s application in particular.
The SEC’s acknowledgement of Bitwise, 21Shares and Grayscale’s applications has ramped up the buzz about XRP ETFs, which Sorlini said could lure in up to $800 million in inflows in their first week of trading.
Investment bank JPMorgan has said it sees up to $8 billion flowing into XRP ETFs within their first year of trading.
An acknowledgement does not mean the applications have been approved, but the recognition of the filings sends a strong signal that things are changing at the regulator, analysts say.
Previously, those applications were simply returned to sender.
High odds
On Wednesday, CoinShares application became the fourth XRP ETF application to be acknowledged.
While the SEC hasn’t responded to WisdomTree and Canary Capital’s filings, the odds of XRP ETFs being approved are high.
Crypto bettors on the prediction market platform Polymarket put the odds of an approved XRP ETF this year at 78%.
Bloomberg Intelligence analysts Eric Balchunas and James Seyffart give XRP ETFs a 65% shot at being approved.
Issuers have also applied to launch ETFs based on other altcoins, such as Solana, Litecoin and Dogecoin.
The flood of applications seeks to leverage President Donald Trump’s promise to relax crypto rules and to end the US government’s crackdown of the industry.
The SEC already appears to be shifting focus from former Chair Gary Gensler’s antagonistic approach towards the industry.
The regulator has sought to pause two major lawsuits ― against Binance and Coinbase ― while a newly minted crypto task force headed by SEC Commissioner and industry ally Hester Peirce develops a new regulatory regime for the market.
Ripple’s case might be the next enforcement action halted, market watchers say.
“Expect the SEC to similarly ‘pause’ the Ripple appeal soon,” former SEC enforcement chief John Reed Stark posted on LinkedIn. “The writing is now on the wall: SEC crypto-enforcement has officially expired.”
The SEC indicted Ripple for alleged securities violation in 2020 for selling XRP to institutional investors. Last year, a judge ruled in Ripple’s favour. The SEC appealed the ruling.
Jacob Joseph, senior research analyst at crypto data provider CCData, told DL News that the “long-standing battle between the two is nearing an end.”
Measuring up to Bitcoin
For XRP and other potential altcoin ETFs, the performance of Bitcoin ETFs is the measure of success.
Investor inflows into Bitcoin ETFs topped $1.6 billion in the first week after the SEC’s approval last January. That’s excluding the outflows from Grayscale’s fund that was converted to an ETF.
Ethereum ETFs, however, did not match Bitcoin’s performance. Instead, outflows from Grayscale’s Ethereum Trust dampened inflows to Ethereum ETFs in the first week, which led to a net negative of $483 million within the period.
Still, some market analysts say XRP ETFs could perform better.
Sorlini told DL News that “a reasonable range” of $400 million to $800 million in inflows was possible for XRP ETFs in the first week of their approval, depending on factors including institutional interest, market conditions, and the number of competing funds.
Last month, S&P Global’s financial arm, Crisil Coalition Greenwich, reported that about 40% of surveyed fund managers were open to investing in altcoins, including XRP.
Update February 19: This story has been updated to reflect that CoinShares' XRP ETF application has also been acknowledged. It has also been updated to reflect that JPMorgan’s estimates are that XRP ETFs could get up to $8 billion in inflows.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. Got a tip? please contact him at osato@dlnews.com.
