Delayed XRP ETF Approvals: What Investors Need to Know

The anticipation surrounding the approval of XRP-based exchange-traded funds (ETFs) has been palpable in the financial markets. However, recent insights reveal that the expected timeline for these approvals may be more procedural than substantive. As experts clarify, the looming October deadlines are not indicative of launch dates but rather procedural milestones in a lengthy regulatory process. Additionally, current factors such as the U.S. government shutdown play a significant role in delaying further progress.

Understanding the SEC Review Process

Greg Xethalis, a noted expert in the field, recently addressed misconceptions surrounding the Securities and Exchange Commission’s (SEC) handling of spot crypto ETFs, including those linked to XRP, Solana, and Litecoin. While the 19b-4 filings related to these ETFs technically became effective under the SEC’s Generic Listing Standards (GLS), this does not automatically lead to product launches. Xethalis emphasized the need for crypto ETF issuers to complete further regulatory requirements, including S-1 filings under the Securities Act of 1933 and Form 8-A under the Securities Exchange Act of 1934.

These filings require a comprehensive review from SEC staff, but the ongoing government shutdown has put a halt to these evaluations. "Basically, we’re waiting for the government to reopen," said Xethalis, underscoring the importance of the SEC’s operations resuming before any significant progress can be made on the applications. Although ETF issuers could technically proceed after 20 days, major exchanges like NYSE Arca, CBOE BZX, and Nasdaq are likely to delay listings until the SEC officially resumes its normal operations.

The Implications of Procedural Milestones

Understanding the October 19b-4 deadlines is crucial for investors. These dates should be viewed as procedural milestones rather than launch deadlines. Once government operations resume, attention will shift to a busy calendar of XRP ETF proposals awaiting review. Firms like Bitwise, Canary Capital, CoinShares, and WisdomTree are all in the pipeline, with evaluations slated to stretch through October 24.

Additionally, the SEC has rescinded previous delay notices for several pending spot crypto ETFs, including those related to Cardano (ADA), XRP, and Solana (SOL). This bodes well for potential future approvals, but without the SEC’s operational capacity, no further progress can be expected until normal functions resume.

Market Sentiment: Optimism Amid Adversity

Despite these procedural hurdles, some market experts maintain an optimistic outlook regarding the near-term prospects for XRP ETFs. Nate Geraci, the president of ETF Store, believes that the launch of XRP-linked funds is "close," highlighting that numerous issuers have filed amended S-1s, a critical step toward eventual authorization. The optimism is palpable, particularly in light of ongoing developments in the crypto ETF landscape.

In a significant move, GraniteShares recently submitted paperwork for a 3x leveraged XRP ETF on October 7. This ETF is designed to amplify both long and short exposures to XRP, which could further stir interest in the altcoin. Crypto attorney Bill Morgan commented that such a move could "spark panic buying," as market participants anticipate an increase in institutional demand once leveraged products come to fruition.

Institutional Interest Remains Strong

Institutional interest in XRP, regardless of regulatory delays, has shown remarkable resilience. Reports from CoinShares indicate that XRP products recorded an inflow of $61.6 million in the week ending October 13, marking the 18th consecutive week of net gains. This consistent flow reflects an enduring institutional appetite for the altcoin, signaling that even in a regulatory environment fraught with uncertainty, XRP remains an attractive investment option.

What Comes Next?

In summary, the anticipated timeline for XRP ETF approvals may be longer than initially expected, owing to procedural factors intertwined with the current government shutdown. Investors should be aware that while the October dates are significant, they do not signify imminent product launches. Instead, they serve as markers within a complex regulatory framework that necessitates attention and patience.

Once the government reopens and the SEC resumes its operations, experts forecast that XRP ETFs could be among the first products cleared for listing—potentially opening the floodgates for institutional investment in this digital asset. As the landscape continues to evolve, staying informed and prepared will be key for investors eyeing entry into the XRP ETF market.