This is the next cryptocurrency spot ETF to be approved in the US.

The XRP spot ETF is emerging as a leading candidate for SEC approval in the United States, driven by its high liquidity and growing market interest.

The approval of Bitcoin ETFs in January 2024, and subsequently that of Ethereum-based ETFs, marked a turning point in the cryptocurrency world, opening the door to a new wave of institutional investment. 

Now, the focus is on What will be the next digital asset to have a spot ETF on the US market?. 

Among the assets vying for the next exchange-traded funds are the most capitalized altcoins, such as Ripple, Solana, and Avalanche, to the most popular memecoins, such as Dogecoin, Shiba Inu, and Trump Official. However, according to Kaiko Research analysis, the XRP spot ETF has emerged as the favorite, driven by its high liquidity and a regulatory environment that appears increasingly favorable.

Interest in cryptocurrency ETFs continues to grow, with asset managers seeking to offer products that facilitate exposure to this market for a wider audience. The SEC, after years of reluctance, finally bowed to market pressure and approved Bitcoin ETFs last year, a move that paved the way for other digital assets, such as Ethereum, to also be listed on the exchange.

XRP Leads: Liquidity and Market Demand

Liquidity is a determining factor in ETF approval. A liquid spot market allows for the creation of efficient structured products, something the SEC has always considered important. In this regard, XRP stands out among other altcoins. 

The data from Kaiko Research indicate that XRP and Solana (SOL) have the highest average market depth of 1% across the exchanges analyzed. Specifically, XRP’s market depth has increased considerably since late 2024, surpassing SOL and doubling Cardano (ADA). This increase in liquidity suggests growing interest and trading activity around XRP, strengthening its case for the potential approval of a spot ETF.

But, in addition to liquidity, XRP spot volume on US exchanges has reached its highest level since before the SEC lawsuit in 2020. This resurgence of volume in the country demonstrates renewed interest from US investors, another factor that analysts at the firm consider to suggest that Ripple's cryptocurrency could be the next to be traded on the stock exchange. 

The precedent of the XRP leveraged ETF

Another factor that could tip the balance in favor of the XRP spot ETF is the existence of a 2x XRP ETF from Teucrium, already approved by the SEC. This leveraged ETF, as reported by this outlet, relies on the returns of European ETPs and swap agreements to double XRP's daily returns. 

According to Kaiko Research's Adam Morgan McCarthy, it's hard to argue against allowing a spot product when there's already a leveraged ETF that's inherently riskier, so the approval given to Teucrium's leveraged fund sets a regulatory precedent that could pave the way for approval of an XRP spot ETF, the analyst said. 

Applications in progress and key deadlines

Several companies have already filed applications to list XRP spot ETFs, including Bitwise, Grayscale, 21Shares, CoinShares and Canary Capital. The SEC acknowledged these requests in late February, setting a critical May 22 deadline for responding to them, beginning with Grayscale's filing. 

The proximity of this date adds pressure on the SEC to make a decision on XRP spot ETFs.

It's worth noting that the approval of a Bitcoin ETF in January 2024 was prompted by Grayscale's legal case against the SEC, which exposed the regulator's conflicting narratives regarding crypto-asset-based investment products. The SEC had approved a Bitcoin futures ETF based on the CME futures market, and since the futures and spot markets were highly correlated, the regulator had to give in and approve the spot ETF for this cryptocurrency. 

While XRP doesn't have an active futures market, the logic behind the Bitcoin ETF approval could apply to it, especially considering the existence of the Teucrium leveraged ETF.

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Implications for the altcoin market

The approval of an XRP ETF would have significant implications for the altcoin market in general. For one, it would further legitimize XRP as an investment asset, attracting institutional capital to the market. Furthermore, it would set a precedent for the approval of other altcoin ETFs, such as Solana, Litecoin, and Cardano.

Kaiko Research has noted that a Solana-based fund could be the next to receive regulatory approval, following the green light for an XRP ETF. If the SEC approves this spot exchange-traded fund, we're likely to see an increase in applications and regulatory scrutiny for other altcoin ETFs. All of this could lead to greater diversification of cryptocurrency investment products available to U.S. investors.

In conclusion, the firm's analysts emphasize that the XRP spot ETF is well-positioned to be the next cryptocurrency spot ETF approved in the United States. Its high liquidity, the precedent of leveraged ETFs, and ongoing applications create a favorable environment for approval. 

The SEC's final decision, expected in May, could mark a significant milestone for the XRP market and the altcoin ecosystem at large. Approval would boost institutional investment in XRP, offering investors a regulated and accessible way to gain exposure to the cryptocurrency. Furthermore, it could pave the way for the approval of other altcoin ETFs, further diversifying the cryptocurrency investment landscape in the United States and, potentially, worldwide. 

Investing in cryptoassets is not fully regulated, may not be suitable for retail investors due to high volatility and there is a risk of losing all invested amounts.