Following the SEC's settlement with Ripple, U.S. institutional investors are reducing their direct holdings of XRP. According to NS3.AI, this shift is due to the ongoing regulatory stigma surrounding the cryptocurrency, despite the anticipated approval of an XRP spot ETF. Trading data indicates a significant 73% decline in institutional futures open interest and notable net outflows from institutional wallets, suggesting a move towards ETF exposure. The market anticipates the approval of an XRP spot ETF by the second quarter of 2026, with institutions opting for ETF exposure to mitigate compliance risks linked to direct XRP ownership.