Ripple CEO issues harsh warning against new controversial bill

By TheStreet Roundtable

9 days ago

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The window to pass a landmark cryptocurrency legislation in the United States is narrowing fast, and Ripple CEO Brad Garlinghouse is not mincing words about what happens if it closes.

The legislation in question is the CLARITY Act, which would, for the first time, regulate the cryptocurrency industry at the federal level by dividing jurisdiction between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

Where the bill stands

The House passed the CLARITY Act last year. The Senate has been the sticking point.

A bill must clear both the Senate Agriculture Committee and the Senate Banking Committee.

The agriculture committee passed its version, but the banking panel has been deadlocked over whether stablecoins should be allowed to offer yield or rewards to holders.

Last week, Senators Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) reached a compromise that could clear the path for a markup this month.

The draft bans rewards on passive stablecoin holdings that are functionally equivalent to deposit interest, while allowing rewards tied to activities like trading, transactions, or staking.

Banks are not satisfied

Even with the compromise in place, major U.S. banking groups are pushing back.

In a joint statement on May 4, industry bodies, including the American Bankers Association and the Bank Policy Institute, said the bill's current language on stablecoin yield still leaves the door open to the very risks the legislation is meant to address.

"We appreciate the work by Senator Tillis and Senator Alsobrooks… however, the proposed language falls short of that goal," the groups said.

Their core concern is that crypto platforms could still offer rewards through membership programs or balance-based incentives, effectively recreating deposit-like returns without technically violating the bill's restrictions.

Time is ticking for CLARITY

Speaking at Consensus Miami on May 5, Garlinghouse warned that if the Senate Banking Committee does not hold a markup hearing in the next two weeks, the chances of a bill passing into law drop "precipitously."

"Candidly, if it doesn't happen, then I think the likelihood is going to drop precipitously because if it gets into midterms — it's going to be too much of a loaded issue," he said.

"Then, post-elections in the fall, I think the likelihood that it gets picked up is even lower," he added.

The November midterm elections are the central problem. As races heat up, lawmakers shift bandwidth toward competitive districts, leaving less room for complex, politically charged legislation.

A crypto bill that doesn't pass in the next few weeks may effectively be shelved for the better part of a year.