XRP may already satisfy the requirements that are needed to be treated as a digital commodity under the proposed CLARITY Act, according to analyst Bill Morgan.
The lawyer has argued that the bill’s maturity framework goes beyond its 20% ownership threshold.
The comments come in response to concerns over whether XRP can qualify as a “mature blockchain system” under the aforementioned legislation.
The CLARITY Act’s framework stipulates that no issuer or affiliated person beneficially owns 20% or more of a digital commodity. It also contains additional criteria pertaining to blockchain governance.
However, the lawyer pointed to alternative provisions that could be relevant to XRP.
The argument is that XRP could potentially satisfy this test because more than half of its total supply has been distributed outside Ripple and related parties.
If that interpretation is accepted, XRP Ledger could end up qualifying under the pre-existing-system provision.
There’s also a separate provision involving exchange-traded products. The Senate draft contains a cutoff for certain network tokens with ETFs on a national securities exchange. XRP could potentially benefit from this provision as well.
Finally, failing to qualify as a mature blockchain would not necessarily mean XRP itself becomes a security in every transaction.
The CLARITY Act distinguishes between a digital commodity and investment contracts involving that commodity. As a result, the regulatory treatment of a particular sale or offering can differ from the legal status of the underlying token itself. The legislation is designed to place qualifying digital commodities primarily under CFTC oversight.
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Ripple’s directly held, operational XRP is roughly 4.7–4.8 billion XRP. The latest widely cited figure is about 4.74 billion XRP in Ripple-controlled wallets.
That said, more than 32 billion XRP remained in Ripple-controlled escrow.
The Clarity Act stumbles
In the meantime, the Clarity Act recently faced a major setback.
As reported by U.Today, the Senate has postponed a floor vote on the much-talked-about legislation.
However, Justin Slaughter, Paradigm's vice president of regulatory affairs, recently opined that the bill was not dead just yet.
U.Today Editorial Team
Dan Burgin
