Experts Explain The Approval Odds

Bitwise Asset Management has officially filed for a spot XRP exchange-traded fund (ETF) with Delaware’s Division of Corporations on September 30. The filing encompasses the registration for establishing a Delaware statutory trust, a business-oriented trust recognized under Delaware state law. This strategic move aligns with precedents set by prominent financial entities such as BlackRock and Fidelity, which initially registered trust entities for Bitcoin (BTC) and Ethereum (ETH) before pursuing ETF listings and trading based on these cryptocurrencies.

The recent filing has sparked discussions within the XRP community, especially in light of past rumors regarding a supposed spot ETF by BlackRock which turned out to be fake. However, Bitwise has officially confirmed the authenticity of their latest initiative. “We can confirm this is a registration by us,” stated Matthew Hougan, Chief Investment Officer at Bitwise. He further noted, “It is a registration of a trust entity in Delaware. We can share more details and comments tomorrow.”

What Are The Chances For A Spot XRP ETF?

Nate Geraci, President of the ETF Store, provided a detailed analysis of Bitwise’s approach and the broader implications of their move via X. Geraci emphasizes the credibility and strategic planning behind Bitwise’s actions. “Bitwise positioning to file for XRP ETF is highly noteworthy IMO… In short-term, this is likely a call option on the November election. But Bitwise is a highly credible crypto-native fund firm that doesn’t just throw stuff at the wall. That’s simply not in their DNA. This is strategic.”

He further speculates on the political and regulatory landscape that could affect the approval of the ETF. “Point being that XRP ETF probably coming at some point… Bitwise just early. Politics clearly matter here in the short-term, but I think this is all inevitable over time. IMO, Bitwise longer-term roadmap is to offer this in an ETF wrapper. The next step will be full tokenization.”

The political implications were highlighted by Eric Balchunas, a senior ETF analyst at Bloomberg, and Alex Thorn, Head of Firmwide Research at Galaxy Digital. They both tie the prospects for a spot XRP ETF to the upcoming US presidential elections, suggesting a significant dependency on political outcomes.

Balchunas articulates his view using a financial metaphor tied to potential election results. “You’ve heard of the Fed Put. This is like the Trump Call.. filings for XRP or Solana or any other altcoins are basically like a cheap call option on a Trump win as Genz will be gone and anything’s possible. Harris wins no way these get approved, and the ‘call’ expires worthless.”

Thorn addresses the potential for an appeal in the Ripple Labs vs. SEC case and its impact on the odds for a spot ETF. “SEC has until next week (Oct. 7) to appeal Judge Torres’ July 2023 ruling (which held that secondary sales of XRP through exchanges were not securities). The likelihood of this ETF filing succeeding drops to near zero if they do appeal (I’ll be very surprised if they don’t appeal).”

Notably, asset manager VanEck is currently trying a similar move with a spot Solana ETF in the US. VanEck filed for a spot SOL ETF on June 27 this year. Industry analysts have noted that the chances for approval of these ETFs hinge sharply on a Trump victory.

At press time, XRP traded at $0.5991.

Featured image created with DALL.E, chart from TradingView.com