XRP on the Verge of Regulatory Change
After years filled with litigation, delisting challenges, and extensive lobbying for exchange-traded funds (ETFs), XRP, the cryptocurrency associated with Ripple, stands on the verge of evading a significant threat posed by its classification as a security.
Potential Legal Exemption from SEC Regulations
Recent revelations surrounding a draft of the U.S. Clarity Act indicate that as of January 1, 2026, any cryptocurrency functioning as the primary asset of a U.S.-listed ETF will no longer be regarded as a security per the Securities Act of 1933. XRP is set to meet this criterion.
This legislative development could provide XRP with a legal exemption from SEC regulations in a manner that Ripple’s numerous court victories and substantial legal expenses—which have exceeded $200 million—have not fully secured.
Impact on XRP and Other Cryptocurrencies
Interestingly, a section embedded within the discussion draft outlines that a “network token” will not be classified as a security if it is the principal asset in an exchange-traded product as of the specified date.
Such a change would align XRP with established cryptocurrencies such as Bitcoin and Ethereum, which the SEC has recognized as non-securities. If the Clarity Act is enacted as proposed, it would also benefit other tokens like SOL, LTC, HBAR, LINK, and even DOGE by providing them similar legal standing.
Implications for Ripple and the Market
The SEC’s case against Ripple hinged on the assertion that XRP is an unregistered security. However, this new legal wording could entirely negate that argument, impacting not just Ripple but all exchange operators and investment managers dealing with XRP.
Conversely, XRP ETFs continue to gain traction in the market. Data from January 12 reveals that these funds attracted a staggering total of $1.23 billion in net inflows across four U.S.-listed ETFs, with Bitwise, Franklin, and Grayscale leading the charge. As the value of XRP hovers around $2, with total assets nearing $1.5 billion, investor sentiment appears robust, aligning well with the potential regulatory changes.
For Ripple and its numerous global partnerships, the implications of this potential legislation could be profound, potentially rendering years of aggressive enforcement actions from the SEC moot in a single legislative move.
