Ripple CLO warns rejecting CLARITY Act risks 67 million holders

The CLARITY Act, formally known as H.R. 3633, cleared the House 294-134 in July 2025 and advanced from the Senate Banking Committee 15-9 in May, but faces a 60-vote threshold on the Senate floor before the August recess.

"A vote against the Clarity Act is a vote to leave the same unregulated conditions in place to be exploited by bad actors," Stuart Alderoty, chief legal officer at Ripple, said. "We've seen this movie. Let's not watch the sequel."

The bill would divide oversight between the SEC and CFTC, create a pathway for digital assets to transition between security and commodity classifications, and require pre-market oversight of tokens. Senate Majority Leader John Thune has said he will press for a floor vote before the work period ends Aug. 7. President Donald Trump is scheduled to meet with senators Thursday to discuss the legislation, with the ethics provision — which would restrict senior officials from holding personal crypto business interests — remaining the primary sticking point.

Failure to pass the bill would maintain the enforcement-first regulatory approach that Ripple itself faced during its four-year SEC litigation over XRP, while the EU's MiCA framework and other jurisdictions advance their own crypto market structures. Polymarket traders price passage at 38% in 2026.

The ethics hurdle and the Senate math

The ethics provision has emerged as the single largest obstacle to reaching 60 votes. Trump's annual disclosure listed $635 million in meme coin royalties and roughly $515 million from World Liberty Financial token sales, giving Democrats a direct line of argument for why restrictions on officials holding crypto business interests are necessary. Only two Democrats — Ruben Gallego and Angela Alsobrooks — backed the bill in committee.

Sen. Thom Tillis signaled negotiators are close to a deal, telling Politico he hopes for an agreement by the end of the week. A revised draft could circulate soon, with ethics language possibly bracketed for later consideration. Sen. Cynthia Lummis, a lead architect of the bill, has been central to the negotiations.

What passage would mean for the market

If the CLARITY Act passes, the most immediate impact would be on institutional participation. Large asset managers and banks have consistently cited regulatory uncertainty as their primary reason for staying on the sidelines. A clear framework defining which assets are securities and which are commodities would remove one of the biggest barriers to institutional capital entering the market.

For retail investors, the consumer protection provisions would shift the regulatory model from enforcement-after-damage to pre-market oversight. Lauren Belive, Ripple's global public policy co-head, argued that the regulatory gaps behind the FTX collapse remain open as long as the bill stalls.

Opposition persists from both sides. Sens. Elizabeth Warren and Chris Van Hollen say the draft weakens consumer protections rather than adding them. Separately, 78 banking groups pushed to rewrite the stablecoin yield rules, while law enforcement opposition eased on Section 604 developer liability.

The broader global push for crypto market structure frameworks adds urgency. A bill that resolves both the technical market-structure questions and the ethics conflict would set a baseline that other jurisdictions will reference. Stalling into the midterm cycle leaves that benchmark unset for at least another year.

This article is for informational purposes only and does not constitute investment advice.