XRP Price Plunge: Spot ETF Delays & Regulatory Hurdles Impact Valuation

Photo of author

By Alexander

Recent market activity has seen XRP experience a significant downturn in its valuation, primarily due to ongoing regulatory uncertainties. This period of heightened caution among investors has coincided with pivotal developments concerning proposed spot XRP exchange-traded funds (ETFs) in the United States, illustrating the cryptocurrency’s susceptibility to regulatory shifts.

Regulatory Roadblocks for XRP ETFs

The U.S. Securities and Exchange Commission (SEC) recently extended its review period for the proposed 21Shares Core XRP Trust ETF. This fund, designed to track the CME CF XRP-Dollar reference rate and leverage Coinbase Custody for asset storage, now faces a prolonged assessment. On May 20, the SEC announced its need for additional time to determine if the product aligns with standards for investor protection and fraud prevention, as stipulated by the Exchange Act. This deferral has undeniably unsettled market sentiment.

The direct consequence of this regulatory pause has been a considerable decline in XRP’s market capitalization, which dropped from over $153 billion to $137.45 billion. Concurrently, the token’s price saw a notable 10% reduction, settling at approximately $2.34.

According to Bloomberg ETF analyst James Seyffart, such delays are not unexpected. He points out that the SEC frequently utilizes the full 240-day review period for ETF applications under the 19b-4 procedure. Consequently, significant progress on new ETF approvals is generally not anticipated before the fourth quarter of 2025.

Future Outlook and Ongoing Legal Battle

Despite the current setbacks, market participants are keenly watching for June 17, when the regulatory agency is scheduled to make a decision on Franklin Templeton’s distinct spot XRP ETF proposal. Optimism remains tangible, with a notable chance of an XRP ETF approval emerging this year.

Adding another layer of complexity to XRP’s regulatory landscape is the protracted legal dispute between Ripple and the SEC. While both parties continue negotiations, procedural postponements have extended the timeline for a definitive resolution. Regardless of the outcome of the ETF approvals, the market has already reacted, underscoring XRP’s sensitivity to shifts in regulatory clarity.

Spread the love