A recent draft provision in the U.S. Clarity Act signals a significant shift for the cryptocurrency market, particularly for Ripple’s XRP token. Under the proposed legislation, any token that serves as the primary asset in a U.S.-listed exchange-traded fund (ETF) as of January 1, 2026, will not be classified as a security under the 1933 Securities Act. Notably, XRP qualifies for this designation.
This potential legal classification is particularly impactful given Ripple’s longstanding strategy of minimizing public promotion of XRP. The company has walked a tightrope for years, wary that any overt promotion could empower the U.S. Securities and Exchange Commission (SEC) to strengthen its case against them. Ripple lawyer Bill Morgan discussed this precarious situation on social media platform X, detailing how the firm had to navigate cautiously to avoid accusations of promoting an unregistered security. “Ripple could not promote XRP or the XRPL for fear of being sued by the SEC for promoting and offering for sale an unregistered security,” he stated. Morgan emphasized that despite this restraint, Ripple was still embroiled in a lawsuit with the SEC.
The anticipation of regulatory scrutiny dates back to 2013, according to Morgan. When the SEC initiated its investigation in early 2018, Ripple drastically reduced its public engagement regarding XRP. This period saw other cryptocurrencies, particularly Bitcoin and Ethereum, gain prominence, while Ripple maintained a low profile. Morgan highlighted the disparity in treatment, pointing to the fact that senior SEC official Bill Hinman openly supported Ethereum, while Ripple had no luxury of similarly promoting its asset.
Even after facing legal action, Ripple has largely refrained from direct promotion of XRP, choosing instead to focus on indirect marketing through strategic acquisitions and the launch of its RLUSD stablecoin. However, there are contrasting viewpoints regarding the impact of the legal battle on the company. Wietse Wind, a key developer within the XRPL community, believes that while the SEC lawsuit posed challenges, it also provided Ripple with increased brand awareness. He argues that the timing issues affecting XRP adoption existed prior to the lawsuit, suggesting the company’s notoriety may have benefited from the ongoing scrutiny.
Morgan counters this perspective, arguing that any promotional efforts stemming from developments prior to the lawsuit would have only bolstered the SEC’s arguments against Ripple. He contends that the inability to market advancements made by XRPL before the legal challenges effectively hindered the token’s adoption.
The provisions outlined in the Clarity Act could transform Ripple’s operational landscape. If these provisions are enacted, XRP would gain legal status that would eliminate its classification as a security under existing laws. For Ripple, this change could open previously inaccessible avenues for growth and innovation, revolutionizing its prospects that have remained stymied since the SEC’s investigation began.
