February 1, 2026, marks another scheduled release of 1 billion XRP from Ripple’s escrow accounts, continuing a long-established monthly process. This event coincides with the most significant set of technical upgrades to the XRP Ledger in recent years. The network finds itself at a pivotal juncture, shaped by post-litigation regulatory clarity and a substantial expansion of its decentralized finance (DeFi) capabilities.

Regulatory Landscape: Settled Yet Evolving

The legal confrontation with the U.S. Securities and Exchange Commission (SEC) reached its conclusion in August 2025 when both parties withdrew their appeals. The $125 million penalty imposed by Judge Analisa Torres remained final—a figure substantially lower than the regulator’s initial $2 billion demand.

However, legislative efforts to cement XRP’s status face new challenges. The proposed CLARITY Act, which would explicitly classify XRP as a non-security, has stalled. Coinbase CEO Brian Armstrong withdrew his support on January 15, 2026, citing concerns over provisions that would ban tokenized equities, restrict DeFi, and limit interest payments on stablecoins. With over 130 proposed amendments now on the table, a vote in the Banking Committee has been postponed.

In a parallel development, Ripple secured a conditional approval from the Office of the Comptroller of the Currency (OCC) for a bank charter in December 2025—a first for a cryptocurrency-focused company. The planned Ripple National Trust Bank is intended to manage reserves for the RLUSD stablecoin, which surpassed a $1 billion market capitalization within its first year. An application for a Federal Reserve master account, which would grant direct access to FedWire and FedNow payment systems, is currently pending.

Technical Foundation Undergoes Transformation

A major protocol upgrade, version 3.1.0, was released by the XRP Ledger Foundation on January 28, 2026. This update introduces three core enhancements designed to bolster the network’s utility:

• Single Asset Vaults: Allows for the pooling of individual assets to be used within lending protocols.
• Lending Protocol: Establishes a foundational framework for uncollateralized fixed-term lending on the XRP Ledger, facilitated through credit intermediaries.
• fixBatchInnerSigs: Addresses a bug related to signatures in batch transactions.

Following the release, Ripple developer Mayukha Vadari encouraged developers on January 30 to test these changes ahead of activation on the Devnet. Several key amendments are now on the verge of going live.

Should investors sell immediately? Or is it worth buying XRP?

The Token Escrow Amendment is scheduled for activation on February 12, 2026, and will extend escrow functionality to include IOUs and Multi-Purpose Tokens. Meanwhile, the Permissioned Domains Amendment has already achieved the required majority support, with activation expected within four days.

Analyzing the Monthly Token Release Mechanism

The release of 1 billion XRP follows a procedure established by Ripple in 2017, when the company locked 55 billion tokens in escrow contracts. These contracts are programmed to release 1 billion XRP on the first day of each month. Historical data indicates that only a portion of these tokens typically enters the circulating supply. Ripple routinely returns between 700 and 800 million XRP to new escrow contracts each month, with an estimated 200 to 300 million tokens actually reaching the market.

Given the current circulating supply of approximately 60.85 billion XRP, the release of 300 million new tokens would represent a supply increase of roughly 0.5%. The market impact often hinges on the proportion Ripple chooses to retain or sell for operational purposes.

Market Position and Forward Outlook

XRP maintains its position as the fifth-largest cryptocurrency by market capitalization, standing at around $60 billion. The spot ETFs launched in late 2025 have demonstrated strong investor interest, attracting inflows exceeding $1.3 billion within their first 50 trading days.

The activation of the Token Escrow Amendment on February 12 is anticipated to accelerate DeFi adoption on the ledger. For the medium-term trajectory, the critical factors will likely be the legislative fate of the CLARITY Act and the final disposition of today’s billion-token release into the circulating supply.

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