The SEC's acceptance of Grayscale XRP Trust's 19b-4 application is a significant milestone, not only for XRP but also for the entire cryptocurrency industry. However, this does not mean that the XRP ETF has been approved; it is merely the first step in the review process. Let's analyze the significance of this event from the following aspects:
1. Legal Significance & SEC's Stance
Change in SEC's Approach?
• Previously, the SEC had a very hard stance against cryptocurrency ETFs, especially with assets other than Bitcoin.
• The acceptance of the XRP ETF application shows that the SEC is becoming more open to reviewing exchange-traded funds related to altcoins.
• This is a positive sign after the SEC's arguments against the Grayscale Bitcoin Trust ETF were dismissed by the court in 2023.
Does XRP have an advantage over Solana?
• Some ETF applications for Solana have been withdrawn due to concerns that Solana could be considered a security.
• XRP has an advantage as the court ruled that XRP is not a security when traded on the secondary market.
• This helps XRP avoid the legal risks that Solana is facing.
2. Impact on the XRP & Crypto Market
Short-term impact (market reacts immediately)
• This news could stimulate capital inflow into XRP, as investors view this as a sign that the SEC is 'loosening up'.
• XRP may see short-term price increases due to positive sentiment from the crypto community.
Mid-term impact (240-day review process)
• During this period, XRP's price may experience significant fluctuations depending on decisions and statements from the SEC.
• If the SEC requests additional information or imposes stricter conditions, the market may react negatively.
• If major funds like BlackRock or Fidelity also apply for the XRP ETF, confidence in the market could increase significantly.
Long-term impact (if approved)
• An approved XRP ETF will pave the way for institutional investors to participate, creating a stable and long-term demand for XRP.
• This could help XRP achieve sustainable price increases, similar to how Bitcoin benefited from recent Spot ETFs.
• The approval of the XRP ETF could also set a precedent for other cryptocurrencies like LTC, DOGE, SOL, ushering in a new era for crypto ETFs.
3. Risks & Challenges
• The SEC may reject the XRP ETF if they believe the XRP market is not transparent enough or is susceptible to manipulation.
• Legal pressure remains: The SEC may still pursue lawsuits related to Ripple, even though XRP is confirmed not to be a security.
• High price volatility: If the SEC signals negatively during the review process, XRP's price could drop sharply, especially if investors sell off to avoid risks.
Conclusion
• Positive: The SEC's acceptance to review the XRP ETF application is a good sign, indicating that the agency is less opposed to altcoin ETF funds.
• Neutral: This is not an official approval, but just the beginning of a long and challenging process.
• Great potential: If the XRP ETF is approved, the market may witness significant institutional capital inflow, creating a positive long-term impact for XRP and the entire crypto industry.