XRP and Increasing Liquidity

[jd2424]

The more XRP liquidity there is, the larger transactions that banks can process using XRP as a bridge currency without suffering from slippage (i.e., the banks save more money). There's been a lot of talk about BTC ETFs, and even ETH, but how would an XRP ETF affect XRP liquidity? An XRP ETF would obviously bring more participants in. Would it cause tighter spreads on all XRP exchanges as market participants could arbitrage between the XRP ETF and the other XRP exchanges, thus narrowing spreads? Im assuming the XRP arbitragers would also create markets on other XRP exchanges as well (e.g., BitStamp, Kraken). Or, would it it have an adverse affect, as the fund managing the XRP ETF would need to consistently go into the XRP exchanges and purchase XRP, thus taking away liquidity on the offer (in theory)? 

Note: This is a question about XRP liquidity, not how an XRP ETF would affect price (although the two are related). 

[kuyu]

The ETF brings them in, but likely they would all have taken more liquidity in alone as individual investors, had they not opted for the collective effort. So I argue it's the other way around and in fact the ETF saves on liquidity.

[Bagheera]

42 minutes ago, jd2424 said:

The more XRP liquidity there is, the larger transactions that banks can process using XRP as a bridge currency without suffering from slippage (i.e., the banks save more money). There's been a lot of talk about BTC ETFs, and even ETH, but how would an XRP ETF affect XRP liquidity? An XRP ETF would obviously bring more participants in. Would it cause tighter spreads on all XRP exchanges as market participants could arbitrage between the XRP ETF and the other XRP exchanges, thus narrowing spreads? Im assuming the XRP arbitragers would also create markets on other XRP exchanges as well (e.g., BitStamp, Kraken). Or, would it it have an adverse affect, as the fund managing the XRP ETF would need to consistently go into the XRP exchanges and purchase XRP, thus taking away liquidity on the offer (in theory)? 

Note: This is a question about XRP liquidity, not how an XRP ETF would affect price (although the two are related). 

What would an XRP ETF look like--i.e., of what would the portfolio of underlying assets be comprised? Would the XRP ETF consist of shares of other crypto currencies?

[Winteriscomming]

Interesting question, but first you have to understand the reasons on why the Bitcoin ETF was rejected. 

The principal reason is the unregulated exchange markets and their obvious manipulation.

The second reason is the constant threat about the HF that could affect the volatility of the markets ( we just saw it). *This will no apply to XRP*

The third reason is the case of DAO, (a possible hack of the stored asset).

This are the most important reasons of others, you can check the files on www.SEC.gov.

So the question is when and how the crypto+market is going to be regulated, them we can talk about an XRP-ETF.

I don want to shut down your valid questions, but we got to be realistic.  While xrp runs in this unregulated market there is not going to be any ETF for them...they can try but we already know that we need regulations first, and this will apply for any coin.

Regards

 

Edited August 28, 2017 by Winteriscomming
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[Alluvial]

5 minutes ago, Winteriscomming said:

Interesting question, but first you have to understand the reasons on why the Bitcoin ETF was rejected. 

The principal reason is the unregulated exchange markets and their obvious manipulation.

The second reason is the constant threat about the HF that could affect the volatility of the markets ( we just saw it). *This will no apply to XRP*

For these reasons, it would make sense to have a closed end fund.  Unlike the ETF which would buy and sell xrps regularly, the number of xrps in a closed end fund will not change.  The firm handling the creation of the fund would determine the interest in xrp (how much to purchase), and then they could purchase that amount of xrp directly from Ripple over the counter.  Seems like a no-brainer.  If there was a large premium for the fund over the underlying net asset value of the xrp, then the fund could issue what is called a secondary offering, which would allow the closed end fund to purchase more xrp.  This would also allow Ripple to divest some of its massive holdings, and generate some cash at the same time.  

Check out the massive premium currently in a bitcoin closed end fund GBTC

https://ycharts.com/companies/GBTC/discount_or_premium_to_nav

[Winteriscomming]

 

8 minutes ago, Alluvial said:

For these reasons, it would make sense to have a closed end fund

Could be a nice solution.