The XRP ETF approval has become increasingly probable following a pivotal regulatory update from the U.S. Securities and Exchange Commission (SEC), which redefined crucial classifications around crypto securities. Market watchers now anticipate the green light for XRP and several altcoin-based ETFs amid the evolving landscape.

New SEC Rule Broadens ETF Possibilities

The SEC recently introduced a major amendment to its definition of “exchange” under the Exchange Act, a move aimed at encompassing decentralized platforms more comprehensively. This broadened framework now includes features of decentralized finance (DeFi) systems and crypto asset securities, significantly shifting the legal outlook for ETFs based on assets like XRP and Dogecoin (DOGE).

According to Bloomberg ETF analyst James Seyffart, this rule change paves the way for future applications targeting spot ETFs for altcoins. While the shift does not guarantee immediate approval, it creates a plausible infrastructure for regulatory acceptance. Seyffart added that these types of ETFs might emerge only after the successful approval of Ethereum-related spot ETFs, projecting such momentum could continue with coins like Solana, XRP, and others in line.

XRP’s Status Strengthens the Case

One of the strongest cases for an XRP ETF approval is its unique legal standing. In a landmark decision in July 2023, Judge Analisa Torres determined that XRP is not a security when sold to retail investors, giving it an advantage over many other digital assets. This unprecedented status makes XRP a legally safer candidate for a spot ETF offering, providing issuers like BlackRock and Fidelity with a potential go-ahead strategy should they aim to capitalize on altcoin momentum.

Attorney Bill Morgan, a well-known pro-XRP lawyer, emphasized this point on social media. He pointed out that among the leading digital assets outside of Bitcoin and Ethereum, XRP is one of the few deemed not to be a security, at least in certain contexts. This could expedite regulatory acceptance once broader crypto ETFs enter mainstream financial products.

Bitcoin ETF Success Sends Positive Signals

Since their approval earlier this year, Bitcoin spot ETFs have drawn massive inflows and remarkable trading volumes. Their success has reassured regulators and asset managers alike, setting a performance precedent for other digital currency ETFs. XRP and DOGE, as high-profile cryptocurrencies with large investor networks, are now seen as top contenders for similar products.

Still, uncertainties remain. For example, the SEC would likely need to resolve DOGE’s regulatory status before an ETF could proceed. Unlike XRP, Dogecoin has not yet undergone any judicial clarification regarding its security classification. However, market optimism is growing given the broader tone-shift in policy toward altcoin inclusion.

Road Ahead for Altcoin ETFs

Despite the encouraging regulatory shift, experts caution that we are still in the early stages. The timing of any official XRP ETF approval depends heavily on precedent set by Ethereum ETF outcomes and the SEC’s pace in updating its classification and oversight methodologies. Asset managers are expected to monitor these developments closely and file applications accordingly.

As the crypto industry gains mainstream traction, spot ETFs provide a bridge between institutional investors and digital assets. XRP’s growing compliance clarity, along with the SEC’s more inclusive rule set, makes it one of the most likely candidates for a regulated investment vehicle in the near term.

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Visual depiction of blockchain infrastructure supporting secure asset transfers like XRP.