Clarity Act Draft Could Remove XRP’s ‘Security’ Status if Included in U.S. ETF by 2026
A draft of the U.S. Clarity Act contains a clause that would exempt any crypto asset from being classified as a security under the Securities Act of 1933 if it is the principal asset of a U.S.-listed exchange-traded product (ETF) on Jan. 1, 2026. XRP qualifies under this provision, potentially ending its central legal vulnerability against the SEC after years of litigation and delistings. The clause would place XRP alongside Bitcoin and Ethereum as non-securities and could also clear tokens such as SOL, LTC, HBAR, LINK and DOGE if they serve as principal ETF assets by the cutoff date. XRP ETFs are already attracting capital: as of Jan. 12, four U.S.-listed products recorded net inflows of $1.23 billion, with assets approaching $1.5 billion and XRP trading above $2. The draft’s language, if enacted, would have legal consequences beyond Ripple’s suit—nullifying the SEC’s unregistered-security argument for any fund or exchange using affected tokens and likely shaping institutional product launches, listings and regulatory risk assessments.
Bullish
The draft Clarity Act clause would materially reduce regulatory risk for XRP by legally excluding tokens that serve as principal ETF assets from security classification. Reduced legal uncertainty typically encourages institutional participation and retail confidence, shown here by existing ETF inflows ($1.23bn across four U.S. products) and rising assets near $1.5bn. Historically, favourable regulatory decisions or clarifications (e.g., when exchanges list assets after clear guidance) have produced positive price reactions and increased liquidity. Short-term, news-driven rallies are likely as traders front-run potential legislative passage and institutions increase allocation. Volatility may spike on legislative milestones (hearings, amendments, votes). Long-term, if enacted, the provision would lower compliance costs and listing barriers, supporting sustained demand, deeper markets and narrower spreads for XRP and other qualifying tokens. Risks remain: the draft could be amended or fail, and market euphoria could reverse on political pushback or differing judicial interpretations. Overall net effect is bullish for XRP and related ETFs, with positive spillover to other tokens that meet the clause’s criteria.