- The SEC approved eleven spot Bitcoin ETFs this week.
- It had previously rejected several ETFs citing the risks of the coin.
- So, will there be Ripple's XRP and IOTA's ETF applications?
The Securities and Exchange Commission (SEC) finally approved eleven Bitcoin ETFs from companies like Blackrock, Invesco, Franklin Templeton, and Ark Invest. With this long chapter now closed, analysts are focusing on the next possible ETF applications.
As I wrote earlier, the most likely ETF application will be Ethereum, the second-biggest ETF in the world. It has real use cases since it powers key industries like DeFi, NFT, gaming, and infrastructure. Its coin has a market cap of more than $300 billion and is one of the most liquid in the market. So, will we see IOTA and Ripple’s XRP ETFs?
The case for Ripple XRP ETFs
A case can be made for Ripple ETF applications. For one, it is one of the biggest cryptocurrencies in the world with a market cap of over $32 billion. This makes it bigger than some well-known companies like PagerDuty, MongoDB, Nutanix, and Unity Software.
Also, Ripple has been around for a long time since it was launched in 2013 and has survived the ups and downs of the crypto industry in this period. It is also one of the most liquid cryptocurrencies in the world.
Most importantly, Ripple’s XRP is different from Ethereum, which makes its pathway to approval easier. In my article on Ethereum and Ethereum Classic, I noted that Ethereum’s key limitation is that it transitioned into a Proof of Stake (PoS) platform in 2022. Therefore, the SEC views it as a security because of the staking rewards it offers.
The SEC used to view Ripple’s XRP as a financial security in the past. This changed last year when Ripple Labs won a lawsuit against the SEC. in it, the judge ruled that XRP is not a security, in one of the landmark processes on record. This makes it easier to use the precedent of the Bitcoin ETF to file for a Ripple ETF.
The only challenge with this is whether there will be enough demand for Ripple ETFs. While Ripple is a big coin, it is no longer as popular as it was a few years ago. This partly explains why the coin is down by over 36% since its victory against the SEC.
Is the IOTA ETF next?
IOTA is another crypto that could see some ETF applications in the coming months. Like Ethereum and Ripple, IOTA is one of the oldest players in the crypto industry. It was started in 2015 and has now grown its market cap to over $800 million.
There are a few reasons why an IOTA ETF might not be coming soon. First, I don’t think that IOTA would attract many ETF holders. As a result, it would likely not make financial sense for companies to file for its ETF.
Second, IOTA is not big enough today. While it has an $800 million market cap, this makes it quite small in the crypto industry. According to CoinGecko, it is the 80th biggest coin in the world. As such I expect that the next ETF applications will be of bigger coins.
Finally, IOTA still has limited use cases. The developers recently unveiled Shimmer, a staging network for developers in its network. They hope that Shimmer will attract more developers to its ecosystem.
