The U.S. Senate’s ongoing debate over the Clarity Act is poised to reshape the landscape for XRP and other digital assets, potentially allowing XRP spot ETFs to function much like traditional banks. With these ETFs already attracting a staggering $1.37 billion in inflows since November 2025, experts like Chad Steingraber argue that clarified regulations could enable everyday token holders to directly swap XRP for ETF shares, turning these funds into secure, regulated “parking spots” for crypto holdings.
The Rise of XRP Spot ETFs and Massive Inflows
XRP spot ETFs have exploded onto the scene, drawing significant investor interest in a short span. Since their launch in November 2025, these funds have seen approximately $1.37 billion in inflows, highlighting the pent-up demand for regulated exposure to XRP. This surge underscores why lawmakers, regulators, and market participants are zeroing in on how these products interact with broader crypto regulations. Unlike futures-based ETFs, spot ETFs hold the actual underlying asset—XRP itself—making them a direct bridge between traditional finance and the blockchain world.
The mechanics of these ETFs rely on an in-kind creation and redemption process, where authorized participants, typically large broker-dealers, exchange baskets of XRP for ETF shares. This method mirrors how physical gold ETFs operate and avoids the need for the fund to sell assets on the open market, which could trigger capital gains taxes at the fund level. For investors, this efficiency means cleaner tax treatment compared to direct crypto ownership, though individual transfers of XRP into or out of the ETF may still count as taxable events.
Enter the Clarity Act: A Game-Changer for Digital Assets
The Digital Asset Market Clarity Act of 2025, or Clarity Act, represents the most ambitious bipartisan effort yet to provide a federal framework for crypto. Having passed both House committees—Financial Services and Agriculture—in late 2025, the bill now faces Senate scrutiny. It aims to delineate oversight: the CFTC would take primary authority over “digital commodities” like Bitcoin, post-merge Ethereum, and potentially XRP, while the SEC retains control over securities-like primary market sales that fail the Howey test.
A pivotal provision in the Senate Banking Committee’s draft, scheduled for markup around January 15, 2026, exempts certain tokens from SEC disclosure requirements. Specifically, if a token serves as the principal asset of a U.S.-listed ETF on a national securities exchange as of January 1, 2026, it avoids the burdensome filings other tokens must endure. This puts XRP in the same legal bucket as Bitcoin and Ethereum, alongside Solana, Litecoin, Dogecoin, Chainlink, and Hedera. Proponents see this as a fast-track to commodity-style treatment, sidestepping protracted SEC classification battles.
Senate Banking Committee Chairman Senator Tim Scott has emphasized the bill’s bipartisan roots, incorporating over 90 Democratic priorities on anti-money laundering (AML), know-your-customer (KYC), and national security. Despite a postponed vote amid industry pushback, Scott remains optimistic, noting ongoing good-faith negotiations with crypto leaders, financial sectors, and both parties.
Expert Insights: Chad Steingraber’s Vision of ETFs as Banks
Analyst Chad Steingraber has emerged as a vocal proponent, predicting that XRP ETFs could evolve to act like banks under the Clarity Act. In his view, once rules are clarified, token holders won’t need intermediaries like big broker-dealers for in-kind swaps. Instead, individuals could directly exchange XRP for ETF shares, leveraging the fund as a compliant, regulated vehicle for holding value—much like depositing cash in a bank.
Steingraber highlights how this setup provides a “regulated parking spot” for XRP, appealing to risk-averse investors wary of self-custody hacks or regulatory ambiguity. The in-kind process enhances appeal by minimizing tax friction at the fund level, allowing ETFs to grow without routine capital gains distributions that plague mutual funds. For the XRP community, this means safer, more organized exposure to Ripple’s token, especially as institutional adoption accelerates.
- Direct swaps: Token holders exchange XRP for ETF shares without fund-level taxes.
- Regulatory clarity: Commodity status shields from SEC scrutiny if ETF-listed by January 1, 2026.
- Investor confidence: Acts as a bank-like haven, reducing custody risks.
- Tax efficiency: In-kind redemptions avoid selling assets on secondary markets.
Industry Divide: Ripple Cheers, Coinbase Pushes Back
Not everyone is on board. While Ripple has expressed support—calling the details “critical” but praising legislative progress—Coinbase CEO Brian Armstrong withdrew backing, citing flaws like a de facto ban on tokenized equities, DeFi restrictions, eroded privacy, and weakened CFTC authority. Armstrong argues the bill expands government access to financial records and could let banks stifle stablecoin rewards, harming competition.
The Senate’s draft also introduces measures like Section 303, empowering the Treasury Secretary to impose conditions on certain fund transmittals linked to money laundering risks. It incorporates the Blockchain Regulatory Certainty Act, exempting software developers and non-custodial infrastructure from money transmitter rules. These provisions aim to foster innovation while bolstering safeguards, but critics fear overreach.
Despite delays—the Senate Banking Committee postponed its vote after late-night debates—the momentum persists. The White House signals commitment to bipartisan passage, aligning with President Trump’s vision of America as the “crypto capital of the world.” Money managers echo the need for oversight to protect everyday investors as crypto matures.
Implications for XRP Holders and the Broader Market
If the Clarity Act passes, XRP ETFs could democratize access to crypto. Retail investors gain bank-like security without managing wallets, while institutions benefit from familiar ETF wrappers. The $1.37 billion inflows signal strong demand, and commodity treatment would turbocharge listings, potentially mirroring Bitcoin ETF success.
Challenges remain: tax events on personal transfers, ongoing SEC-CFTC turf wars, and reconciling industry concerns. DeFi exemptions for non-custodial staking—where node operators don’t control funds—offer breathing room, but stablecoin and privacy debates could derail progress.
Broader market ripple effects include unified treatment for major tokens, spurring innovation and keeping capital in the U.S. As Senator Scott notes, this balances consumer protection with growth, ensuring fair markets for all.
In conclusion, XRP ETFs stand on the cusp of banking-like functionality, thanks to the Clarity Act’s promise of regulatory daylight. For holders, this means safer harbors amid volatility; for the industry, a structured path to mainstream adoption. As debates converge toward full Senate passage—requiring 60 votes—the stage is set for XRP to redefine crypto-finance fusion. Investors should watch closely: clarity isn’t just coming; it’s about to unlock trillions in potential.
