Brad Garlinghouse anticipates that the SEC and CFTC will take on more regulatory responsibilities while Congress remains in a stalemate over new legislation.
On Tuesday, the US Senate did not manage to advance the Digital Asset Market CLARITY Act, failing to secure the 60 votes required for the bill to proceed to a final vote.
Ripple’s CEO, Brad Garlinghouse, acknowledged that while the setback is disappointing, it will not alter the company’s trajectory.
Garlinghouse Describes the Vote as a Missed Chance
In a statement on X shortly after the vote, Garlinghouse expressed that his team, along with much of the industry, put forth significant effort to push the CLARITY Act forward, viewing this battle as one that transcended Ripple itself.
He emphasized that both consumers and the United States’ standing in digital finance lost out and mentioned an upcoming analysis of what led to this outcome. In his opinion, political agendas overshadowed sound policy.
Despite the setback, he did not view the defeated vote as the conclusion of US crypto policy initiatives. Garlinghouse expects the SEC and CFTC to continue crafting regulations to fill the legislative void left by Congress. He confirmed that Ripple will remain engaged in this process.
“Ripple is in a strong position,” he stated, highlighting the demand from both traditional finance and digital asset sectors. He argued that a missed vote in Washington does not diminish the company’s “momentum, global presence, or client base.”
Ripple’s Chief Legal Officer, Stuart Alderoty, shared his thoughts as well, stating, “Ripple and XRP are on firm ground,” referencing the 2023 federal court decision that ruled XRP is not a security, along with a joint declaration from the SEC and CFTC in March that classified XRP as a digital commodity. He also mentioned his expectation for both agencies to continue establishing clearer regulatory guidelines.
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Reactions within the industry varied. CryptoLaw referred to the situation as a shift rather than a termination, agreeing that the next stage in the battle for crypto regulations would now involve the SEC and CFTC. Conversely, analyst ChartNerd took a more cautious stance, warning that although agency regulations provide some clarity, they cannot replace actual legislation as rules can be changed.
What the CLARITY Act Aimed to Accomplish
The recent vote was not meant to fully pass the CLARITY Act; it served merely as a procedural step to bring the bill closer to a final vote, and its failure indicates that discussions surrounding the legislation will continue rather than resolve.
The proposed bill sought to allocate oversight of digital assets between the CFTC and SEC while introducing the concept of “ancillary assets,” which are network tokens that may derive their value from a company’s efforts yet are still classified as commodities with their own disclosure obligations.
Additionally, it aimed to address decentralized finance platforms that appear decentralized on paper but are still managed by identifiable entities, mandating CFTC registration for their spot trading activities.
Lastly, businesses such as exchanges, brokers, and dealers—which are the primary platforms used by Americans for cryptocurrency transactions—would have been subject to a new federal registration and regulatory oversight framework.