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Ripple CEO Brad Garlinghouse said US lawmakers are nearing a breakthrough on the long-awaited ‘CLARITY Act,’ arguing that momentum is building for a vote that could finally deliver clearer rules for the digital asset industry after years of policy gridlock.
Speaking on April 13 ET at the Semafor World Economy event, Garlinghouse framed the current negotiations as reaching the point where compromise becomes unavoidable. “When people feel the greatest frustration, that’s when compromise ultimately happens,” he said, adding that the bill is “very close” to passing.
The ‘CLARITY Act’ has emerged as a centerpiece in Washington’s broader debate over how to regulate crypto markets, including the line between securities and commodities oversight and what compliance standards should apply to issuers and intermediaries. While Garlinghouse initially expected passage by late April, he said the timeline slipped due to a dispute over whether stablecoin issuers should be allowed to offer ‘interest’ or rewards—an issue that has become one of the most politically charged elements of the package.
At the heart of the standoff is the concern from banking groups that yield-bearing stablecoins could accelerate deposit outflows—particularly from regional banks—by offering consumers a payment-like instrument that also generates returns. The American Bankers Association (ABA) has pushed back strongly against allowing stablecoin ‘interest,’ arguing it could undermine traditional deposit funding and, by extension, credit creation in the banking system.
Crypto advocates and some policy researchers, however, have countered that banning stablecoin rewards may offer limited real-world benefits to bank lending and that deposit flight risks are being overstated. According to findings cited in the Korean report, White House-linked research assessed that the effect of restricting stablecoin yields on expanding bank lending would be limited and that the risk of deposit outflows was “not quantitatively large.”
With the two sides long deadlocked, the bill’s progress slowed. But negotiations have recently shown signs of convergence, and Garlinghouse said the legislation could pass by the end of May if talks continue moving in the current direction.
In the Senate, discussions on the ‘CLARITY Act’ are expected to resume this week. Senator Thom Tillis is widely viewed as a key Republican negotiator on stablecoin provisions, and a draft compromise language addressing stablecoin revenue models may be released in the near term, raising expectations that lawmakers could be closing in on a workable agreement.
US Treasury Secretary Scott Bessent has also urged Congress to move forward, warning that ‘regulatory clarity’ for the crypto sector can no longer be delayed. Industry participants see the Treasury’s posture as significant, given the department’s central role in stablecoin discussions touching payments, money transmission, and broader financial stability concerns.
Garlinghouse used the moment to emphasize Ripple’s positioning as regulation potentially shifts from enforcement-driven uncertainty toward a more formal rulebook. He said Ripple is increasing its role as a bridge between traditional finance and crypto, centered on XRP and the company’s stablecoin RLUSD, while expanding collaborations with global financial institutions.
Market observers broadly expect that if the ‘CLARITY Act’ advances, it would help define the US crypto market structure more explicitly—potentially improving compliance predictability for issuers and exchanges and lowering barriers for ‘institutional capital’ to participate. While the final text remains uncertain, the direction of travel in Washington is being read as increasingly constructive for the sector’s medium-term growth.
🔎 Market Interpretation
- Regulatory catalyst in focus: Ripple CEO Brad Garlinghouse signals the US ‘CLARITY Act’ is nearing a vote, which markets may treat as a potential inflection point after years of uncertain, enforcement-led policy.
- Key friction point = yield on stablecoins: The timeline slipped due to disagreement over whether stablecoin issuers can offer “interest”/rewards—now a politically sensitive issue with direct implications for product design and adoption.
- Banking vs. crypto narrative clash: Banking groups (notably the ABA) warn yield-bearing stablecoins could pull deposits from regional banks; crypto advocates cite research suggesting deposit outflow risks are not “quantitatively large” and lending benefits from restrictions may be limited.
- Short-term timing signal: Garlinghouse now frames end-of-May as a plausible passage window if negotiations continue to converge; Senate talks are expected to resume this week with potential draft compromise language.
- Institutional participation sensitivity: If the bill advances, clearer market structure definitions could reduce compliance ambiguity for issuers/exchanges and lower hurdles for institutional capital—potentially improving sector sentiment even before final rules are implemented.
- Issuer positioning: Ripple highlights its strategy to benefit from a rules-based environment via XRP utility and RLUSD stablecoin expansion, aiming to serve as a bridge between traditional finance and crypto.
💡 Strategic Points
- Watch the stablecoin “rewards” compromise: Any allowed yield framework (caps, disclosure, segregated reserves, limiting marketing as “interest,” or restricting distribution channels) could determine which stablecoin business models win in the US.
- Monitor Senate negotiators and drafts: Senator Thom Tillis is cited as a key Republican negotiator; the release of compromise text can be an actionable signal for shifting odds of passage.
- Treasury involvement raises probability of movement: Treasury Secretary Scott Bessent urging progress suggests executive-branch pressure to resolve market-structure ambiguity, especially where payments and financial stability intersect.
- Prepare for compliance re-basing: Market participants may need to re-map tokens/venues to commodity vs. security oversight, revisit listing standards, disclosures, custody practices, and intermediary obligations as definitions become clearer.
- Scenario planning for stablecoin issuers:
- If yield is permitted: competition may shift toward reserve management efficiency, distribution partnerships, and transparent reward mechanics.
- If yield is restricted: growth may favor non-yield stablecoins tied to payments, on/off-ramps, and enterprise settlement, while rewards migrate to separate products (e.g., lending/staking-like structures) with higher compliance burdens.
- Market structure clarity as a medium-term growth lever: Lower legal uncertainty can improve exchange listing confidence, issuer fundraising considerations, and institutional on-boarding—though final impact depends on implementation details and agency coordination.
📘 Glossary
- CLARITY Act: A proposed US legislative package aimed at clarifying crypto market structure, including regulatory jurisdiction and compliance expectations for digital asset issuers and intermediaries.
- Stablecoin: A digital token designed to maintain a stable value (often pegged to the US dollar) typically backed by reserves such as cash and short-term US Treasuries.
- Yield-bearing stablecoin / stablecoin “interest”: A stablecoin model where holders receive rewards or returns, often sourced from reserve yields or issuer revenue-sharing, raising banking-policy and securities-law questions.
- Securities vs. commodities oversight: The regulatory classification question that determines whether the SEC (securities) or CFTC (commodities) primarily governs a token and related market activity.
- ABA (American Bankers Association): A major US banking industry group that has argued yield-bearing stablecoins could intensify deposit outflows and affect bank funding.
- Regulatory clarity: Clear, consistent rules defining what is allowed, who is supervised, and what compliance steps are required—often viewed as a prerequisite for broad institutional participation.
- Institutional capital: Investments from large entities such as asset managers, pension funds, insurance firms, banks, and corporations that typically require stronger compliance certainty.
- RLUSD: Ripple’s referenced stablecoin product, positioned for payments and finance integration alongside XRP.
- XRP: A digital asset associated with Ripple, commonly discussed in the context of cross-border payments and financial-infrastructure use cases.
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