XRP Holders on Edge: The CLARITY Act Just One Step from Triumph!

After an extended standstill, the CLARITY Act has now overcome its primary hurdle that stalled progress throughout the summer. President Trump endorsed the ethical regulations that were necessary for Democrats. The key issue now is the enforcement mechanism and its duration.

In light of this development, XRP (CRYPTO:XRP) surged past $1.13, a critical threshold it had struggled to maintain for several weeks. The wider market also responded positively, with Bitcoin crossing $66,000 and many significant altcoins rising. Traders on Polymarket increased the likelihood of the bill passing this year from approximately 32% to just above 40%. However, that initial excitement has since waned.

Given that the CLARITY Act is now on the verge of a Senate floor vote, should XRP investors feel jubilant?

Recent Developments Regarding the CLARITY Act

The CLARITY Act had been stalled for months due to a single contentious issue. Democrats were unwilling to provide the necessary votes without ethical guidelines that would restrict the president’s own crypto pursuits, while Republican negotiators needed Trump’s approval to agree to those guidelines. This stalemate persisted long enough that investors recently began to question whether XRP might drop below the $1 mark while the bill made no progress.

This changed this week. On July 16, Trump met in the Oval Office with Senators Cynthia Lummis and Bernie Moreno, chief of staff Susie Wiles, and acting Attorney General Todd Blanche. The White House finalized the ethics language and shared it with Senate Republicans on Monday afternoon, with Trump agreeing to regulations that would restrict his own crypto interests. A White House representative described this as “the most comprehensive ethics provision in history.”

The draft released on Wednesday would prohibit the president, vice president, members of Congress, federal judges, and other designated officials—and their spouses—from issuing or endorsing digital assets for payment while in office. This addresses the concerns raised by Democrats but comes with two notable conditions: the provision will expire in 2029, and regulators will have a full year post-enactment to implement it. Following the news, the overall crypto market surged by about $70 billion within a single day, with XRP ranked as the third best-performing asset among the top 50 cryptocurrencies, surpassed only by Ondo and Cardano.

Senate Republicans put forth a revised draft on Wednesday, but no vote on the floor has been arranged, and Democrats had yet to evaluate the text when the first objections were raised. Traders had already begun to speculate on the implications of the bill’s potential approval.

However, this optimism has already started to fade. Polymarket’s probabilities peaked at around 48% on Tuesday, only to decline to 38% by Thursday morning, as the ethics agreement resolved one conflict but ignited another.

Ongoing Struggles Surrounding CLARITY Act Enforcement

The debate has shifted from the existence of ethics regulations, since Trump has accepted those, to which entity will enforce them and the duration of the enforcement. An ethics rule is only effective if there is someone willing to uphold it, and the two parties seek different enforcers.

The current language designates the Department of Justice (DOJ) as the exclusive enforcer, excluding state attorneys general. Democrats are concerned because the DOJ is accountable to the president, against whom these rules are aimed. Todd Blanche, Trump’s former personal lawyer, has been leading the DOJ in an acting capacity since April while awaiting his Senate confirmation for the permanent role. State attorneys general would operate independently of this power structure, and many are Democrats, which is precisely why Republicans prefer to exclude them.

Senator Angela Alsobrooks, one of the two Democrats who supported the bill during the Senate Banking Committee’s review in May, has outright rejected the proposal, labeling it “unserious” and stating that she cannot endorse the bill in its current form. She emphasized her commitment to continue negotiating for a deal that holds everyone accountable, indicating her position as a starting point rather than an endpoint.

Both parties recognize the high stakes involved, given that this very dispute led to the collapse of negotiations in June when Republicans removed a provision that allowed state attorneys general to challenge the DOJ’s refusal to enforce the regulations.

No one involved wants to see the bill fail over this same issue again. The CLARITY Act requires 60 votes to pass in the Senate. If all Republicans vote in favor, seven Democrats would ensure its success, though negotiators believe they might need to secure support from at least 10. While two Democrats voted in committee favorably, both cautioned that a committee vote does not guarantee support on the Senate floor. The need for this provision arises from the fact that Trump’s 2025 financial disclosure revealed over $1 billion in crypto earnings.

Is There Time for the CLARITY Act to Pass Before August Recess?

There remains a chance for the bill to pass within the timeline, but the opportunity is closing. Approximately twelve working days remain before the Senate breaks for August 7, and missing this deadline would result in substantial delays. The Senate will not reconvene until September 11, at which point midterm campaigns will dominate the agenda, halting significant bipartisan initiatives. Senator Cynthia Lummis has warned that if this year’s effort fails, the next opportunity might not arise until 2030.

Before any voting can occur, Majority Leader John Thune must allocate floor time and file a cloture motion to initiate the process, neither of which has yet happened. His office indicated on Wednesday that he plans to seek floor action in the upcoming days. The CLARITY Act has been ready for a Senate vote since June 1, contingent upon his scheduling.

Thune expresses a positive outlook for bipartisan agreement but wants that agreement secured before dedicating floor time to it. This makes the enforcement clause more than just one hurdle among many, as the vote cannot be scheduled until Democrats come on board.

Those closely involved in the negotiations have become notably more optimistic in recent days. Senator Kevin Cramer remarked that the Senate is “almost there,” stating that only minor details remain unresolved, while Treasury Secretary Scott Bessent referred to the bill as being on the “1-yard line.” Galaxy CEO Mike Novogratz, an advocate for the bill’s passage, noted that discussions are now focused on “word-smithing” regarding the ethics provisions.

Negotiators are also addressing aspects related to decentralized finance and measures against illicit financing, although both sides still characterize ethics as the main obstacle. Galaxy Research takes a more cautious stance, estimating a 50-50 probability of passage, but those involved are no longer disputing the bill’s contents. The current risk lies in the possibility that the time runs out before finalizing one specific clause.

Implications of CLARITY Act Passage for XRP

In March, XRP secured its classification as a commodity when the SEC and CFTC collaboratively declared it a digital commodity, rather than a security. However, this classification came through agency guidance rather than legislation, meaning a future administration could nullify it. This uncertainty is why many large institutions have remained sidelined, despite the guidance, which is exactly what the CLARITY Act aims to address by enshrining this classification into law.

Once this classification transitions from agency guidance to statutory law, capital that has been hesitant to invest could finally flow in. Our projections suggest that this could lead to an infusion of up to $8 billion in new ETF investments, significantly boosting the price of XRP. This assumes that passage not only reverses the current trend: XRP ETFs attracted $1.3 billion upon launch, but inflows have significantly halted this year, with Standard Chartered recently revising its XRP target down from $8 to $2.80, specifically due to this slowdown.

Additionally, XRP holders witnessed a glimpse of this potential this week. Following a news announcement regarding the ethics clause, XRP outperformed nearly all other large-cap cryptocurrencies, demonstrating the impact of anticipation alone, with the true implications yet to be confirmed.

However, the decline from 48% to 38% in just three days reflects the reality. A resolution for one clause is still pending, several additional Democrats must vote affirmatively, and Thune needs to allocate floor time before August 7. While the CLARITY Act is closer than ever to reality, it has not yet become law.

Editor’s Note, July 23, 2026: This article has been updated to reflect the release of a new draft of the CLARITY Act. The revisions indicate that the drafted ethics provision would sunset in 2029 and grant regulators a year for implementation, correct the Senate voting details, update Polymarket’s probabilities, clarify the status of the bill text, and specify that the SEC and CFTC’s March action was a joint interpretive guidance, not a ruling.

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