The CLARITY Act is designed to do something the US crypto industry has been demanding for years: establish clear, consistent rules for digital assets and define which government agencies — primarily the SEC and CFTC — have regulatory authority over different parts of the market. Right now, that ambiguity is one of the biggest structural barriers to institutional adoption of crypto in the United States. Kristin Smith, one of the bill’s key advocates, believes the legislation could pass by July 2026 — a timeline broadly aligned with projections from JPMorgan analysts who have also pencilled in mid-year approval. Brad Garlinghouse, CEO of Ripple, was even more bullish earlier this year, suggesting the probability of passage could reach 90% by April.
That level of confidence from the CEO of the company behind XRP is not incidental — Ripple has fought a years-long legal battle with the SEC over whether XRP constitutes a security, and regulatory clarity could finally resolve that question in Ripple’s favour. Earlier this year, the bill briefly lost momentum when Coinbase CEO Brian Armstrong withdrew his support, arguing that certain provisions appeared to favour traditional banking institutions over crypto-native companies. The withdrawal created a ripple of uncertainty across the industry and raised genuine fears that the legislative window for 2026 could close before a deal was struck. That the bill has recovered momentum despite Armstrong’s criticism is itself significant.
Institutional appetite for regulated crypto exposure has been building steadily, and lawmakers on both sides are increasingly aware that regulatory inaction is a competitive disadvantage relative to the EU, UK and Asia. The CLARITY Act is not without its complications. ISO 20022 is the international standard for financial messaging — the technical language that banks, central banks, and payment networks use to communicate. A growing number of digital assets have been developed to operate within or alongside this standard, including XRP, Stellar (XLM), Algorand (ALGO), Hedera (HBAR), and IOTA.
XRP in particular has been in regulatory limbo for years due to the SEC lawsuit. A clear legislative framework that defines XRP as a non-security digital commodity would open the door for its use in institutional cross-border payments at a scale that is currently impossible. If the CLARITY Act passes, the bull case is compelling — institutional capital could enter the market at scale. The bear case is a prolonged delay; if disagreements stall the bill into late 2026 or beyond, the uncertainty premium on crypto assets persists.
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