Can XRP Overcome Centralization Hurdles To Make The ETF Cut?

Ripple’s XRP faces an uphill battle for inclusion in exchange-traded funds (ETFs), according to a new scoring system by GSR. The score, revealed by Wu Blockchain, evaluates cryptocurrencies based on two key factors: decentralization and demand. These criteria are becoming increasingly important as regulators like the SEC scrutinize crypto assets for classification purposes.

The GSR report ranks XRP low due to concerns surrounding its level of decentralization. Ripple Labs, the company behind XRP, holds a significant portion of the total XRP supply. This concentration of ownership contradicts the principle of decentralized control, which is a hallmark of many cryptocurrencies. XRP reflects this on the GSR score, receiving a -0.9 in the decentralization category.

Demand for XRP also falls short, scoring a -0.2. While XRP boasts a place among the top ten most valuable crypto assets and enjoys high trading volume across major exchanges, this demand doesn’t outweigh the centralization issues. Consequently, XRP’s total score lands at a low -0.44, suggesting a slim chance of being included in an ETF based on GSR’s criteria.

This news comes just a day after Ripple President Monica Long publicly advocated for a spot XRP ETF in the US market. Long emphasized XRP’s prominent position, its consistent ranking in the top ten, and its current status as the seventh most valuable crypto. Additionally, she highlighted XRP’s high trading volume across major US exchanges and the July 2023 court ruling clarifying XRP’s status as a non-security—a distinction shared only with Bitcoin in the US.

Despite these arguments, the GSR report suggests coin has work to do. Other cryptocurrencies show a brighter outlook for ETF inclusion. Ethereum (ETH) leads the pack with a score of 1.13, reflecting strong decentralization and high demand. Solana (SOL) follows closely with a score of 0.58, indicating a good balance between the two factors.

While XRP may be struggling, Ripple CEO Brad Garlinghouse remains optimistic. In a recent interview, Garlinghouse expressed a strong belief that ETFs for XRP, Solana, and Cardano are inevitable. He even suggested the possibility of an XRP ETF launch as early as next year.

Only time will tell if Garlinghouse’s prediction holds true. However, the GSR report sheds light on the challenges coin faces in its pursuit of an ETF listing. Until it addresses concerns surrounding centralization and demonstrates stronger demand, the coin path to an ETF may remain a long one.