Key Takeaways
- Speculations are swirling around BlackRock applying for a spot XRP ETF.
- There are several factors why the asset manager could consider filing such an ETF.
- Meanwhile, XRP has drawn massive attention in the crypto market with futures ETFs gaining traction.
BlackRock, the $10-trillion giant that introduced the crypto investment market with its spot Bitcoin and Ethereum exchange-traded funds (ETFs), is back in the speculation spotlight. This is not the first time people have been discussing BlackRock’s link to XRP, a crypto that has endured years of regulatory scrutiny. Although BlackRock has not declared any intention of launching an XRP ETF, its own requirements for launching digital asset products provide hints as to what may enable such a fund to be feasible.
Is XRP Next in BlackRock’s ETF Line?
This debate arose in an interview between Robbie Mitchnick, the Head of Digital Assets at BlackRock, and ETF analyst Nate Geraci. Recently, Geraci, who has publicly indicated that XRP is perhaps the next rational filing of the asset manager, inquired about how the company proceeds to consider new opportunities regarding crypto ETFs.
Mitchnick avoided mentioning certain coins, but his statements put forth the criteria that BlackRock considers prior to making a launch commitment. He noted that client demand comes first. BlackRock will not launch a new crypto ETF unless its investors explicitly indicate that they would like to be exposed.
The company has continuously constructed products that answer the institutional appetite, and with regard to digital assets, the same rule holds. “We look to where our clients want access,” Mitchnick said, adding that the basis of any ETF decision is demand.
The second filter is the quality of assets. To qualify as a crypto for an ETF, one has to exhibit substantial liquidity, a large market capitalization, and an ecosystem that is sufficiently extensive to accommodate institutional flows into the market.
In the absence of these attributes, BlackRock runs the risk of developing a product that is unable to support the volume of trading its ETFs normally receive. Notably, Mitchnick has termed this review as a continuous process; the company constantly follows the dynamic crypto market and does not make a single decision.
XRP nowadays checks a lot of those boxes. It has a market cap of approximately $165 billion and is the third-largest non-stablecoin asset, next only to Bitcoin and Ethereum. The liquidity in the key exchanges is healthy, and most importantly, the regulatory overhang that shrouded the future of XRP has been taken away to a large extent. Furthermore, he legal tussle that Ripple had to face with the Securities and Exchange Commission is over, which has provided the token with new legitimacy.
Market Shows Increased Interest in XRP
The market indicators are also giving an indication of increasing appetite. The REX-Osprey XRP ETF opened to more than $37.5 million in volume during its first day of trading earlier in the month, marking an update that indicated the desire of investors to access XRP via institutional-grade and regulated funds. To an observer, this is the kind of data that BlackRock cannot afford to pass over in case the demand by clients really drives its decision-making.
The speculation is only stimulated by the track record of the firm. Its spot Bitcoin ETF has surpassed $60 billion in inflows, whereas the Ethereum ETF has raised over $13 billion. The two funds transformed crypto investing in an overnight fashion, which demonstrated that when BlackRock takes the plunge, the dam may burst.
At the moment, the whole world is watching Washington. SEC has a sequence of decision deadlines on XRP ETFs applications at 21Shares, Franklin Templeton, and Canary beginning in January. The fact that those filings are made or broken down might give the best indication yet of the XRP preparing to launch a product of the most influential asset manager in the world.
