Are XRP ETFs Set to Operate Like Banks? An Expert's Perspective

In recent discussions surrounding the Clarity Act in the US Senate, the focus on XRP and similar crypto products has intensified, particularly regarding their potential regulation. New reports suggest that this bill could provide a clearer status for tokens associated with US-listed ETFs, moving them toward a classification akin to commodities. XRP spot ETFs have attracted significant capital, with inflows totaling approximately $1.37 billion since their introduction in November 2025, which explains why lawmakers and market analysts are taking a keen interest.

Key Takeaways:

The Clarity Act aims to clarify the status of XRP and other crypto tokens in the US.
XRP ETFs have seen substantial capital inflows, reaching $1.37 billion since their launch.
ETFs allow for "in-kind" transactions, which could enable token exchanges in a bank-like manner.
Community insights suggest that ETFs may provide a more secure place for XRP holders.
Tax implications for ETF transactions could vary based on their structure and transaction methods.

XRP

Understanding the Mechanisms Behind ETFs

ETFs operate on a creation and redemption process that can occur "in kind," meaning the fund accepts actual assets rather than cash. While this method is genuine, it does not permit regular buyers to directly deposit tokens into a fund. Instead, authorized participants, such as major broker-dealers and market makers, handle the influx of tokens into ETFs in exchange for shares. Ordinary investors engage with ETFs by buying or selling shares on trading platforms, highlighting the distinction that raises questions about an ETF’s ability to function like a bank.

"The XRP ETF's are also In-Kind Funds, so you can deposit XRP directly into the fund in exchange for the exact value in shares. Most will likely prefer this option after the law is passed. There are numerous benefits to this, as you will effectively be able to utilize the ETF like a 'bank'." — Chad Steingraber (@ChadSteingraber) January 13, 2026

XRP ETF

Community Insights and Expectations

Members of the XRP community are sharing their visions of a future where ETFs serve as a regulated safe haven for token holders. Chad Steingraber, a prominent voice within the community, advocates for the in-kind mechanism, suggesting that investors will be able to swap XRP for corresponding ETF shares. This arrangement could provide a more reliable way to hold value until they wish to engage with their tokens again. His thoughts have contributed to the growing perception that ETFs might be utilized in a manner similar to banks.

XRP Trading Chart XRPUSD is currently trading at $2.06. TradingView

Understanding Potential Tax Implications

The structure of ETFs is significant when considering taxes. Many ETFs leverage in-kind creation and redemption to sidestep frequent capital gains distributions at the fund level, enhancing their tax efficiency. However, the tax responsibilities for token holders can vary based on how transactions are executed and the specific legal architecture of the product.

Under existing US regulations, transferring an asset by altering its form may trigger taxable events for the entity transferring the asset, and distributions occurring at the fund level can still lead to tax liabilities for investors. Chad Steingraber emphasizes that the in-kind framework provides XRP holders a regulated environment to safeguard their tokens when they seek security and oversight. He believes that investors may be drawn to ETFs once the Clarity Act clarifies existing regulations, not merely for the mechanics involved but for the comfort of holding XRP in a regulated, organized format. ETFs can thus offer a more secure method for managing tokens while maintaining accessibility when needed.