Analysts claim two factors position XRP ahead of other assets for spot ETF approval by the SEC

Analysts at crypto research and data platform Kaiko argue that superior market liquidity and Teucrium's recent launch of a 2x leveraged product position XRP ahead of other assets for the next spot ETF approval from the Securities and Exchange Commission in the U.S., following Bitcoin and Ethereum.

In anticipation of the crypto-friendly Paul Atkins taking up the role of SEC Chair left vacant by the industry-hostile Gary Gensler following his Senate confirmation last week, a slew of asset managers, including Bitwise, Grayscale and VanEck, have been filing additional crypto-related ETFs in recent months with deadline decisions now fast approaching.

XRP leads the active ETF applications, according to Kaiko data, with 10 filings, followed by five for a Solana ETF and three each for Litecoin and Dogecoin. 

XRP has the highest average altcoin 1% market depth on major centralized crypto exchanges — indicating that there are large amounts of buy and sell orders close to the current market price, contributing to a stable market environment with lower slippage and making it one of the most liquid. "A highly liquid spot market is important for creating efficient structured products, and the former SEC leadership was highly sensitive to this," the Kaiko analysts said in a Monday report .

Solana has the second-highest average 1% market depth for altcoins, followed by Cardano. Notably, XRP's depth soared toward the end of 2024 — flipping SOL and doubling ADA — as participants speculated pro-crypto Donald Trump's presidential election win could lead to a resolution of the SEC's long-running case against Ripple — one of the previously noted barriers to a spot XRP ETF in the U.S. That seemingly came to pass when Ripple CEO Brad Garlinghouse said the company's legal battle with the SEC had ended in March, though a " negotiated resolution " is still ongoing.

Beyond this improving market dynamic, Teucrium's leveraged XRP ETF, XXRP, is another factor highlighted by Kaiko. XXRP seeks to provide twice the daily return of XRP through the use of derivatives, including futures contracts and swap agreements, becoming the first XRP ETF in the U.S. when it launched last week, though the SEC is yet to approve an elusive spot XRP ETF product.

"Very odd (maybe a first) that a new asset's first ETF is leveraged. Spot XRP still not approved, [although] our odds are pretty high," Bloomberg Senior ETF Analyst Eric Balchunas said ahead of the launch.

Demand for spot ETF uncertain

Several spot XRP ETF filings have been acknowledged by the SEC earlier this year, suggesting the review process is moving forward. However, Presto analyst Min Jung previously told The Block that demand for spot XRP ETFs remains uncertain . "Ethereum ETFs have seen limited traction, and institutions still largely believe 'there is no second best,'" Jung said, referring to the success of the U.S. spot Bitcoin ETFs. 

Despite the potential positive tailwind, the XRP options market remains skewed bearish on Deribit, the Kaiko analysts noted, signaling demand for downside protection. However, they argue this is more likely linked to broader market uncertainty due to present macroeconomic conditions rather than being indicative of an ETF decision.

Meanwhile, other cryptocurrencies, such as Litecoin, which have very similar consensus mechanisms to Bitcoin and share similarities to commodities could also have a clear path to approval, the Kaiko analysts noted. In January, Balchunas also predicted a spot Litecoin ETF was the "most likely" next to be approved in the U.S. amid engagement from the SEC on Canary Capital's application.

Solana is another popular contender, with the launch of SOL CME futures in March seen as a precursor to SEC spot ETF approval — following a similar timeline of events that ultimately led to the launch of spot Bitcoin and Ethereum ETFs in the U.S.

Neighboring Canada is also set to launch spot Solana ETFs this week, with the country often leading eventual approval of the same crypto-based ETFs in the U.S. "FWIW, the 2 Solana ETFs in the U.S. (which track futures, so not a perfect guinea pig) haven't done much. Very little in aum," Balchunas said , responding to the news. "The 2x XRP already has more aum than both the Solana ETFs, and it came out after. Wouldn't read a ton into it, but it's our first look at the altcoin race."

While Purpose Investments filed a preliminary prospectus with Canadian securities regulators for an XRP ETF in January, aiming to become the world's first spot XRP ETF issuer, such a product is yet to be approved in Canada, let alone the U.S. XRP also doesn't have a CME futures market, and its volume is heavily concentrated offshore, the Kaiko analysts acknowledged. "However, its share of spot volume on U.S. exchanges recently climbed to its highest level since before the SEC's 2021 lawsuit prompted widespread delistings," they said. "In contrast, Solana has seen its U.S. market share steadily decline, falling to 16% — down from the 25-30% range it held through much of 2022."

What's next?

May 22 is the next important date to watch, as the SEC must respond to Grayscale’s spot XRP filing by then. 

"Since [Teucrium's] leveraged ETF relies on returns from European ETPs and swap agreements to guarantee twice the daily returns of XRP, it's hard to see how a spot product is more risky and therefore diminishes most arguments for denying these applications," the Kaiko analysts argued.

On Monday, the SEC delayed crypto ETF staking and in-kind redemption decisions as the agency mulls its long-term crypto regulatory strategy.

Last week, Kaiko said Trump's tariff effect tumbled crypto volumes in Q1 but argued catalysts, including crypto ETFs, offered possible tailwinds for the second quarter of 2025.