XRP Could Meet Clarity Act Commodity Status Under Alternative Provisions

XRP's status as a digital commodity under the proposed CLARITY Act is being reevaluated by some experts. According to Bill Morgan, a lawyer who has analyzed the bill, XRP may already satisfy the requirements needed to be treated as a digital commodity. This is significant because the legislation aims to place qualifying digital commodities primarily under CFTC oversight.

The CLARITY Act's framework stipulates that no issuer or affiliated person beneficially owns 20% or more of a digital commodity. However, Morgan points out that XRP could potentially satisfy this test using alternative provisions in the bill. Specifically, he notes that more than half of XRP's total supply has been distributed outside Ripple and related parties.

This interpretation suggests that XRP Ledger could qualify under the pre-existing-system provision or benefit from a separate provision involving exchange-traded products. Additionally, 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.

Meanwhile, the Senate has postponed a floor vote on the legislation due to concerns over its viability. However, Justin Slaughter from Paradigm's vice president of regulatory affairs believes that the bill is not dead yet. As of now, approximately 4.74 billion XRP remain in Ripple-controlled wallets, while more than 32 billion XRP are held in escrow.