XRP’s Potential ETF Prospects Hinge on SEC’s Ripple Case Outcome

• CME Group will launch new reference rates and real-time indices for XRP, sparking speculation about an XRP ETF.

• The ongoing SEC vs. Ripple case impacts the future of XRP, with investors awaiting the final verdict.

CME Group, the world’s largest derivatives exchange, announced it is introducing new reference rates and real-time indices for Ripple’s XRP and the Internet Computer (ICP). As highlighted in our previous article, this new update will go live on July 29th. This has also raised questions on whether this could be the start of the long-awaited XRP exchange-traded fund (ETF). 

Big #Ripple news from CME Group! Starting July 29, transparent pricing for CME CF Internet Computer-Dollar and #XRP-Dollar Reference Rates will be available. pic.twitter.com/LRQdI3IJxD

— Collin Brown (@CollinBrownXRP) July 11, 2024

The announcement from the CME Group has boosted expectations of the possibility of an XRP ETF launch. Bloomberg ETF analyst James Seyffart said that the ETF for Ripple’s XRP may only be viable if it is listed on a huge derivative exchange like CME. Seyffart also stated that for an ETF to be approved, XRP futures must be traded on CME because the primary asset for the ETF would be provided. 

Despite there being no XRP futures on CME, the advent of reference rates and real-time indices has begun a conversation in the market. The expectation for an XRP ETF is rising even more, given the current events in the ETF space, notably the expected approval of a Spot Ethereum ETF and application for a Spot Solana ETF. 

Ripple CEO Brad Garlinghouse commented on the collaboration, stating,

“First step towards institutional crypto products is to have a trusted benchmark reference rate. Nice to see CME Group and CF Benchmarks collaborate on this for an XRP index. The market has spoken.”

The recent news from the CME Group raised investor expectations of a US XRP spot ETF market. In November 2023, the price of XRP jumped to $0. 7503 following news that BlackRock applied for an XRP-spot ETF. However, these reports were later proved to be fabricated and fake news. 

SEC vs. Ripple Legal Battle Continues

The current SEC vs. Ripple lawsuit has significant consequences for the fate of XRP. In July 2023, Judge Analisa Torres fined Ripple for selling the XRP without registering it as a security with the US securities authorities. However, she also ruled that the programmatic sales of XRP did not satisfy the Howey Test.

The SEC has stated its desire to challenge the ruling made on programmatic sales, which may cause a further hold-up on the launch of a US XRP-spot ETF. On 23rd August 2023, the SEC filed a Motion for Interlocutory Appeal to seek the Court of Appeal’s permission to appeal the programmatic sales decision. However, in October 2023, Judge Torres denied this motion, saying that the SEC must postpone the filing of the appeal until the completion of the Ripple case. 

The investors are waiting for the final judgment to be made on the penalty that Ripple has to incur for violating the US securities laws. If the above happens and there is a positive outcome for Ripple, then this may open up the door for a US XRP-spot ETF to be approved, thus boosting the XRP market.  As of this writing, XRP recorded a notable 2.05% gain in the last 24 hours of trading at $0.4549.