A fresh wave of excitement is building around the potential approval of an XRP exchange-traded fund (ETF). As more companies push forward with their ETF applications, the crypto community is eagerly watching to see if the U.S. Securities and Exchange Commission (SEC) will give the green light to these new investment vehicles. But while the momentum is building, approval may not be as imminent as many hope.

The Growing Interest in XRP ETFs

Over the past few months, several companies have submitted ETF applications for XRP, with the latest being CBOE’s filing of the 19b-4 form for Bitwise’s XRP ETF. The filing has drives  renewed interest in the cryptocurrency market, especially given the growing popularity of Bitcoin and other digital assets in the world of ETFs. However, as industry experts warn, there’s still a long road ahead before XRP ETFs become a reality.

Matt Hougan, Chief Investment Officer at Bitwise, recently shared his thoughts in an interview with Thinking Crypto. Hougan emphasized that while the process of submitting an ETF application for XRP has gained traction, it is far from a quick and easy endeavor. The SEC has historically been slow to approve cryptocurrency-related ETFs, and Hougan believes that it could take months—if not years—before we see the green light for XRP ETFs.

SEC’s Comprehensive Review Process

One of the primary reasons behind the lengthy approval process is the SEC’s meticulous review of these applications. The regulatory body is known for its cautious approach when it comes to cryptocurrency, largely due to concerns about market manipulation and investor protection. In the past, the SEC has rejected several cryptocurrency ETF proposals, and the process for approval remains rigorous.

According to Hougan, the SEC is now in the process of evaluating several XRP ETF applications. While the regulator has historically been skeptical about cryptocurrencies like XRP, the growing number of ETF applications suggests that the SEC may be warming to the idea of cryptocurrency investment funds. However, Hougan cautioned that approval should not be expected anytime soon. He estimates that the SEC’s review process could take at least six months, as they solicit public feedback and analyze the potential impact of XRP ETFs on the broader market.

The Role of the Futures Market in ETF Approvals

While the SEC has yet to approve any cryptocurrency ETF that does not involve Bitcoin, there’s a growing belief that the creation of a regulated futures market for XRP could play a critical role in speeding up the approval process. In the past, ETFs for assets like gold and Bitcoin were only approved after regulated futures markets were established. This pattern suggests that the SEC may view the establishment of a futures market for XRP as a key factor in deciding whether to approve an XRP ETF.

Hougan acknowledged that the SEC’s approval of XRP ETFs could depend heavily on the availability of a regulated futures market. While not a requirement, the presence of a futures market would provide an additional layer of transparency and regulation, which could make the SEC more comfortable approving an ETF for XRP. Futures markets allow investors to trade contracts based on the future price of an asset, and they help establish a clearer picture of that asset’s price movement. This, in turn, could reduce the potential for market manipulation and provide a more secure foundation for an XRP ETF.

Why the SEC Is Taking Its Time

The SEC has long been known for its caution when it comes to cryptocurrencies, and the agency’s slow pace in approving digital asset ETFs is well-documented. But the reason for this caution is simple: protecting investors and preventing fraud. The cryptocurrency market, while growing rapidly, remains highly volatile and susceptible to market manipulation. For the SEC, the approval of any new investment vehicle—especially one based on a digital asset like XRP—must be done with careful consideration of these risks.

Hougan believes that the process could be expedited if the market becomes more regulated. With greater oversight and institutional involvement, XRP’s market liquidity could increase, making the asset less prone to price manipulation. This, in turn, could make it easier for the SEC to approve an XRP ETF. But as Hougan pointed out, this process will take time, and it will require significant development in both the XRP market and the broader cryptocurrency space.

What Does This Mean for XRP Investors?

For investors in XRP, the news of growing ETF applications is promising, but it’s important to temper expectations. The approval of an XRP ETF could be a game-changer for the cryptocurrency, as it would provide a regulated investment vehicle for institutional and retail investors alike. However, this process is still in its early stages, and there’s no guarantee that the SEC will approve any of the current applications.

In the meantime, XRP investors should continue to keep an eye on developments in the futures market and other regulatory changes that could impact the approval of these ETFs. As Hougan mentioned, the SEC’s review process is lengthy, but the growing interest in XRP ETFs is a clear signal that the cryptocurrency market is maturing and that the SEC is taking a more open-minded approach to digital assets.

The Bigger Picture: XRP’s Future in the Crypto Market

While the path to an XRP ETF may be slow, the broader implications of these developments are undeniable. The fact that major companies are filing for XRP ETFs indicates a growing belief in the long-term viability of the cryptocurrency. As the regulatory landscape for digital assets continues to evolve, XRP may soon find itself at the center of a new wave of institutional investment.

For now, the best approach for XRP investors is to stay informed and patient. The approval of an ETF may still be months or years away, but the fact that the conversation is happening is a positive sign for the cryptocurrency’s future. As more institutional investors get involved and the market continues to mature, XRP could be poised for significant growth in the years to come.