XRP ETF Approval: What the Latest Developments Mean for Investors

According to Brad Garlinghouse, head of Ripple Labs, spot ETFs for crypto assets other than bitcoin and Ethereum, as well as baskets of multiple cryptocurrencies, are ”inevitable” in the future.

In an interview with Bloomberg, he said he was looking favorably at the creation of exchange-traded funds (ETFs) based on the XRP token (Ripple's token), but declined to reveal specific plans in that direction.

Market's Interest in XRP ETF

The possibility of token-based exchange-traded funds from Ripple has the market interested. In November 2023, fake news about the upcoming launch of an ETF based on the XRP token by BlackRock caused a sharp jump in the price of the cryptocurrency. The fake news of the filing quickly spread on social media and triggered a 12% rise in the price of XRP within 30 minutes of the initial reports. After it was revealed that the report was false, the price returned to previous levels.

XRP, developed by Ripple, is designed to enhance the efficiency and speed of cross-border payments, making it a unique asset in the cryptocurrency market.

Garlinghouse declined to comment on whether his company is in talks with BlackRock or other management companies, and emphasized that while Ripple is a significant player in the XRP ecosystem, the company itself is not the only player in the field.

U.S. Market Sees Interest From Investment Giant Franklin Templeton

The debut of spot bitcoin-ETFs in the US has revitalized investors’ interest in bitcoin. A month after their launch, analysts noted a significant inflow of liquidity to U.S. exchanges. According to Kaiko, the aggregate value of orders to buy and sell bitcoin within 2% of the current market price in the exchange stacks of U.S. exchanges has increased by 30% since January, reaching a mark of $539 million, the highest value since October 2023.

Ripple Labs is now forced to focus more on overseas markets, in part due to a protracted legal battle with the US Securities and Exchange Commission (SEC) over the regulatory status of its XRP token, specifically whether it should be classified as a security.

Nevertheless, Ripple is looking to expand its presence in the U.S. market through the launch of a licensed financial services business. In mid-February, Ripple Labs announced its intention to acquire financial licensee Standard Custody & Trust Co. and in comments to reporters, Ripple Labs President Monica Long said it was one step in the company’s strategy to expand in the U.S. market.

According to information from Blockworks, John Deaton, one of Ripple’s lawyers in the case against the SEC, will run for Senate from Massachusetts, challenging Sen. Elizabeth Warren, a prominent cryptocurrency critic.

External factors, such as the trade war between the US, Canada, and Mexico, have also impacted market sentiment and contributed to fluctuations in cryptocurrency prices.

According to Jeffrey Kendrick, head of currency and digital assets research at Standard Chartered, the price of ETH could rise to $4,000 on expectations of the approval of spot exchange-traded funds (ETFs) on Ethereum. Analysts at brokerage Bernstein published a report estimating the probability of Ethereum-ETF approval by the U.S. Securities and Exchange Commission by May at approximately 50%. They project the likelihood of final approval within the next 12 months.

The question of launching spot ETFs on other crypto assets remains open for now. The head of investment firm ARK Invest, Catie Wood, told The Wall Street Journal’s publication stated that she doesn’t expect ETFs for cryptocurrencies other than bitcoin and ethereum to be approved in the near future. Her company runs a joint spot fund with 21 Shares for bitcoin and is awaiting approval of a request for a similar fund for Ethereum.

Investment Giant’s Role

Franklin Templeton, a California-based investment management giant with $1.6 trillion in assets, has made a bold move into the cryptocurrency market by filing an application for an XRP ETF. This marks a significant milestone as it is the first time a traditional finance giant has ventured into the XRP ETF space, potentially setting a precedent for others to follow.

As a leading investment management company, Franklin Templeton’s involvement brings a new level of legitimacy and credibility to the XRP ETF market. With its vast resources and expertise in managing assets, Franklin Templeton is well-positioned to attract a broader range of investors to the XRP ETF market. This could lead to increased demand and liquidity for XRP, potentially driving up its value and market capitalization.

The approval of Franklin Templeton’s XRP ETF proposal would provide investors with a regulated and familiar investment vehicle to access XRP. This could significantly boost investor confidence and interest in XRP, further solidifying its position in the cryptocurrency market.

Franklin Templeton’s entry into the XRP ETF market also underscores the growing interest in digital assets among traditional finance giants. As the cryptocurrency market continues to evolve and mature, it is likely that more investment giants will follow Franklin Templeton’s lead, exploring opportunities in the space and bringing increased investment and attention to digital assets.

In addition to its XRP ETF proposal, Franklin Templeton has also filed for a Solana ETF, demonstrating its commitment to expanding its presence in the cryptocurrency market. This move is expected to have a positive impact on the market, attracting more investment and driving up demand for digital assets.

The approval of Franklin Templeton’s XRP ETF proposal could also pave the way for the approval of other cryptocurrency ETFs, including those for Litecoin and other digital assets. This could lead to increased investment and trading activity in the cryptocurrency market, further driving up demand and liquidity for digital assets.

Overall, Franklin Templeton’s role in the XRP ETF market is expected to be significant, bringing increased legitimacy, credibility, and investment to the space. As the cryptocurrency market continues to evolve, Franklin Templeton and other investment giants are likely to play an increasingly important role in shaping the future of digital assets.

XRP ETFs Will Show Good Performance, says Ripple Labs

When asked about the demand for XRP ETFs, especially since Ethereum ETFs haven't recorded significant flows like Bitcoin, Garlinghouse refuted the notion that spot ETH ETFs haven't performed incredibly well.

He emphasized that the XRP ETF will also perform well and attract significant demand, citing the active community supporting XRP around the world.