Key Takeaways
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Discussions about a spot XRP ETF have transitioned from Crypto Twitter to active trading desks on Wall Street.
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Analysts project that initial inflows for a spot XRP ETF could surpass $1 billion within the first few months of trading.
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Recent rule changes by the SEC have facilitated a more streamlined process for listing spot cryptocurrency funds.
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While approval is not guaranteed, the momentum behind a potential XRP ETF is rapidly building.
Evolving Conversation Around XRP ETFs
The discourse surrounding a spot XRP (XRP) exchange-traded fund (ETF) has moved beyond the realm of Crypto Twitter and is now a topic of serious discussion on Wall Street trading desks. This shift is driven by two primary factors.
Firstly, ETF specialists Nate Geraci and Bitwise chief investment officer Matt Hougan suggest that the market is significantly underestimating the potential demand for a spot XRP ETF. Geraci has cautioned that investors are "severely" underestimating these potential flows, while Hougan anticipates that the fund could accumulate approximately $1 billion in assets within its initial months of trading.
Secondly, the infrastructure for spot cryptocurrency funds in the U.S. market has advanced. The Securities and Exchange Commission (SEC) has implemented generic listing standards that expedite the approval process for certain spot crypto ETFs. Consequently, exchanges have begun listing altcoin products under this new framework.
While these developments do not guarantee an XRP ETF approval, they explain the increasing seriousness of the conversation.
Understanding a Spot XRP ETF
A spot XRP ETF would function by holding XRP with a qualified custodian. It would then issue shares that mirror the fund's net asset value through the customary creation and redemption processes. This structure is significant because it enables XRP exposure within standard brokerage accounts, model portfolios managed by financial advisors, and retirement platforms, offering familiar reporting and tax treatments.
This differs from a futures-based product, which tracks derivatives rather than the underlying asset and can experience divergence from spot prices. The SEC's rule change in September 2025 did not constitute a blanket approval for all crypto ETFs but rather established a uniform starting point, moving away from one-off approvals.
Current Status of U.S. Approvals
In mid-September 2025, the SEC adopted generic listing standards. These standards permit major exchanges to list certain spot crypto exchange-traded products (ETPs) under a unified rule set, eliminating the need for individual, case-by-case approvals. This change streamlined the listing process but did not eliminate regulatory oversight or review for products that do not meet the qualifying criteria.
Following this, the government shutdown in October led to a slowdown in staff reviews. Despite this, a few altcoin spot products, including those for Litecoin (LTC) and Hedera (HBAR), have progressed through existing pathways. These should be viewed as specific instances rather than a broad approval for all such products.
For XRP, several prominent issuers have already submitted filings or indicated their intention to do so. The timelines for these approvals may still be subject to change as the SEC evaluates three key areas:
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Surveillance: The SEC assesses whether the markets are adequately monitored and resistant to manipulation.
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Custody: The robustness and insurance coverage of asset safekeeping arrangements are reviewed.
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Investor Protection: The reliability of pricing and disclosures in real-world applications is examined.
In essence, the path forward is becoming clearer, with products queued for review, but no U.S. spot XRP ETF has yet received approval.
Projected Scale of Flows
The optimistic outlook for XRP ETFs is based on three main factors:
Distribution: Financial advisors generally prefer ETFs over the process of opening individual exchange accounts for their clients. An ETF opens up access through registered investment advisor channels and retirement accounts.
Existing Infrastructure: The established infrastructure, including authorized participants, market makers, and surveillance agreements that were developed for Bitcoin and Ether (ETH) ETFs, can be extended to other spot products.
Distinct Investment Thesis: XRP's long-standing value proposition centers on its utility in cross-border payments and settlement. This provides investors with a narrative distinct from Bitcoin's positioning as "digital gold."
Given this framework, analysts like Geraci and Hougan suggest that initial demand could exceed current expectations, potentially surpassing $1 billion early in its lifecycle. While this is a projection rather than a guarantee, it underscores why trading desks are actively modeling various scenarios.
Potential Obstacles to Approval
Even with the implementation of generic listing standards, approval is not an automatic outcome. The SEC retains the authority to question the sufficiency of spot XRP market resistance to manipulation and the robustness of surveillance sharing. Furthermore, the agency may scrutinize the adequacy of custody and insurance arrangements, as well as the reliability of pricing sources across different trading venues.
The government shutdown has contributed to backlogs, which could lead to a clustering of approval decisions later in the year. While the approval process is now more streamlined than it was in 2023-2024, it still involves several critical checkpoints.
Current XRP Exposure Options for U.S. Investors
Investors located outside the United States already have access to physically backed ETPs that directly hold XRP.
Two prominent examples include the 21Shares XRP ETP (AXRP), listed on the Swiss Stock Exchange, and CoinShares Physical XRP, available on various European exchanges. It is important to note that these are not U.S. ETFs; they are ETPs governed by local regulations, offering different levels of investor protection and tax implications compared to U.S. products.
U.S. investors can also purchase XRP on compliant cryptocurrency exchanges. However, this method requires investors to make decisions regarding self-custody, involves exposure to exchange counterparty risk, and utilizes fragmented trading venues.
Is XRP the New Bitcoin?
Framing the discussion around whether XRP is "the new Bitcoin" is a misdirection.
Bitcoin's investment narrative is primarily centered on scarcity and its role as a hedge against macroeconomic uncertainty. In contrast, XRP's value proposition is built around its functionality as a payment infrastructure and its capability for fast settlement. If an XRP ETF is launched, it is unlikely to supplant Bitcoin's existing role. Instead, it would expand the range of options available to financial advisors seeking to incorporate a payments-focused allocation within traditional investment accounts.
The pricing and liquidity of such an ETF will continue to be influenced by the underlying spot markets and the ETF's effectiveness in tracking them closely. Factors such as the efficiency of creation and redemption processes, trading spreads, and the depth of market maker participation will all play a significant role.
XRP's ETF Moment: Approaching, But Not Yet Realized
The growing interest from Wall Street in an XRP ETF is more than just speculative hype. The operational mechanics for such products are now well-understood, distribution channels are established, and credible analysts believe the potential demand could be surprisingly strong.
However, the SEC must still officially approve the product, and the timing of this approval can be affected by factors such as staff availability and reviews of market quality. For those closely following this development, it is crucial to distinguish between the odds of approval and the investment case itself. Investors should monitor regulatory filings, understand the mechanisms by which an ETF would hold and price XRP, and be clear about the distinctions between U.S. ETFs and the non-U.S. ETPs currently available.
This article does not offer investment advice or recommendations. All investments and trading activities carry inherent risks, and readers are encouraged to conduct their own thorough research before making any decisions.