What the Clarity Act fight means for XRP and US crypto investors

The battle over US crypto regulation is reaching a critical moment in Washington. The Clarity Act, a long-awaited bill designed to define how digital assets are treated under US law, is finally close to a Senate vote. If it passes, it could reshape the future of XRP, Bitcoin, Ethereum, exchanges like Coinbase, and the rights of everyday crypto holders.

Attorney John Deaton – known for representing over 75,000 XRP holders in the SEC vs. Ripple case and now running for US Senate in Massachusetts – has been deeply involved in this fight. In this article, we break down what the Clarity Act actually does, why it’s being blocked, and what it could mean for your crypto portfolio.

Why the Clarity Act matters right now

According to Deaton, more than one in four American adults owns some form of crypto. That’s roughly 50–75 million people, and even more if you include exposure through Bitcoin ETFs. Despite that, Congress has still not passed a clear, comprehensive law for digital assets.

The result has been years of “regulation by enforcement” – agencies like the SEC suing projects and exchanges one by one instead of working under clear rules. Ripple, Coinbase, Kraken, LBRY, and others have collectively spent hundreds of millions of dollars fighting lawsuits that might never have happened if a framework like the Clarity Act had been in place.

Deaton argues that this isn’t just a crypto industry issue – it’s a consumer protection issue. Without clear rules, regular users are left exposed if something goes wrong at an exchange or platform.

Key protections the Clarity Act would introduce

One of the most important features of the Clarity Act is how it treats customer assets held on exchanges and platforms. Deaton highlights a simple but powerful change: in a bankruptcy, your crypto would legally be your property, not the exchange’s.

Right now, if a major US exchange like Coinbase ever filed for bankruptcy, there would be a real legal question: do the assets in customer accounts belong to the customers, or are they part of the company’s bankruptcy estate? The Clarity Act would settle that by establishing that customer accounts are customer property, giving users explicit bankruptcy protection.

Deaton says that protection alone is enough reason to support the bill. It would also:

• Clarify which digital assets are treated as commodities vs. securities
• Define how platforms can legally operate in the US
• Reduce the risk of sudden enforcement actions that wipe out companies and harm users

For a deeper dive into how this framework could impact XRP specifically, see this breakdown of what the Digital Asset Clarity Act could mean for XRP holders.

Why Elizabeth Warren and the banking lobby are fighting it

One of the most vocal opponents of the Clarity Act is Senator Elizabeth Warren. She has described the bill as legislation “written by the crypto industry to protect and advance the crypto industry,” calling it a giveaway to a “zillion dollar industry” and linking it to Donald Trump’s crypto activities.

Deaton pushes back hard on that framing. He points out that Warren’s own crypto bill was largely drafted by the Banking Policy Institute, whose chair is JPMorgan CEO Jamie Dimon. That proposal would have effectively banned self-custody of Bitcoin, XRP, Ethereum, and other assets for regular Americans, forcing them into tightly controlled products like ETFs run by large financial institutions.

In his view, Warren is not protecting consumers – she’s protecting the incumbent banking system. Her vision, he argues, is a future dominated by a handful of mega-banks and a tightly controlled, government-directed CBDC, with far less room for open, permissionless crypto networks.

Deaton also notes the broader hypocrisy: virtually every major industry in the US has a lobby that helps shape legislation – from pharmaceuticals to banking. Singling out crypto for doing the same, while ignoring the banking lobby’s role in blocking the Clarity Act, is part of the political game.

How politics and the 2026 midterms are shaping the bill

On paper, the Clarity Act has bipartisan potential. Many Republicans are now coalescing around it, and some Democrats are open to supporting it if they can resolve concerns about ethics and conflicts of interest.

In practice, election politics are getting in the way. Deaton and others describe several dynamics at play:

• Trump optics: Some Democrats don’t want to hand Donald Trump a perceived “win” on crypto policy right before the midterms, especially given his public support for Bitcoin and crypto projects.
• Bank pressure: Certain large banks remain strongly anti-crypto and have influence over key senators. As Deaton puts it, many senators are funded by banking interests, not by everyday voters.
• Fear of a recorded vote: Leadership can avoid putting the bill on the floor by using a “silent filibuster” style process. That lets senators avoid going on record as either pro- or anti-crypto, which is politically safer but leaves the industry in limbo.

Deaton’s view is blunt: if Senate leadership refuses to hold a vote, that’s not just politics as usual – it’s a failure of leadership and an attempt to protect vulnerable incumbents from accountability.

Why a vote – even a failed one – would be a turning point

Many in the crypto community, including Deaton, say that at this stage the most important thing is simply getting an on-the-record vote. Even if the Clarity Act doesn’t pass on the first attempt, a roll-call vote would show exactly which senators stand with crypto users and which stand with the banking lobby.

That matters because crypto voters are becoming a real political force. Recent numbers show:

• 25,000 constituents contacting senators in Arizona about crypto issues
• 100,000 in Florida
• 32,000 in Pennsylvania
• 34,000 in New Jersey

Deaton notes that if 100,000 people in a state are calling their senators, there are probably ten times that many following the issue. In close races, that can decide who wins.

Pro-crypto political groups like Fairshake PAC have already shown their impact, going 48–0 in targeted races in 2024. With nearly $200 million in funding, they can make life very difficult for any senator who blocks common-sense crypto legislation and then faces re-election.

What this could mean for XRP and other major assets

So what happens to XRP, Bitcoin, Ethereum, and the broader market if the Clarity Act becomes law?

Deaton believes it would be a “green light” moment for the entire industry, especially for large-cap assets with clear use cases. The key difference between agency guidance and a law passed by Congress is permanence. Agency rules and interpretations can be reversed quickly if a new administration takes over. A statute is much harder to unwind.

With a law on the books:

• Big banks and asset managers would have far more confidence to offer crypto products and services at scale.
• Developers could build on networks like the XRP Ledger without constantly worrying about being blindsided by enforcement.
• Institutions could allocate to crypto knowing the rules won’t flip every four years.

Major firms like JPMorgan and Morgan Stanley are already talking about 1–10% portfolio allocations to digital assets. Clear law would likely accelerate that trend. Deaton expects explosive growth for tokens with real utility – from Bitcoin’s store-of-value narrative to Ethereum’s role in stablecoins and DeFi, to XRP’s payments and settlement capabilities.

For more context on how regulatory clarity tends to move markets, see this analysis of why upcoming US crypto clarity could be huge for XRP.

Crypto as a new path to the American dream

Beyond price action, Deaton frames crypto as a modern extension of the American dream. Historically, people built wealth by owning appreciable assets – real estate, stocks, gold, and more recently, Bitcoin and other digital assets.

Today, that path is getting harder. In states like Massachusetts, starter homes can cost $600,000 or more. Many people work two jobs just to cover rent and utilities, with nothing left to save for a house or retirement.

Tokenization and fractional ownership could change that. Imagine an apartment building tokenized on a blockchain, where everyday investors can own 0.5% or 1% through digital tokens. Instead of needing six figures for a down payment, people could gradually build exposure to real estate and other assets in smaller, affordable pieces.

Deaton argues that this isn’t a left or right issue – it’s an American issue. Giving more people access to assets that can appreciate over time is one of the most powerful tools for reducing inequality and helping people escape poverty.

The danger of doing nothing

While the Clarity Act offers a path forward, Deaton is clear about the risks if it fails or is delayed again. Without legislation, the US will continue down the path of regulation by enforcement and political whiplash:

• Future administrations could revive anti-crypto campaigns like “Operation Choke Point 2.0,” cutting off banking access to exchanges and crypto companies.
• Key wins in court or at agencies like the CFTC could be reversed or undermined.
• Entrepreneurs will keep leaving the US for jurisdictions with clearer rules.

He points to the LBRY case as a cautionary tale. The SEC’s stance that LBRY Credits were securities effectively bankrupted a small American company trying to compete with YouTube. Only later did regulators start to refer to LBRY Credits as a digital commodity – too late to save the business.

Similarly, the FTX, Voyager, and BlockFi collapses generated over a billion dollars in legal fees for bankruptcy lawyers, while customers were left fighting for scraps. Deaton argues that much of this damage could have been avoided with clear legislation.

What crypto holders can do

Deaton’s message to US crypto holders is straightforward: your voice matters more than you think. Senators are already seeing tens of thousands of calls and emails on crypto issues. In close races, a motivated crypto voting bloc can be decisive.

Practical steps include:

• Contacting your senators’ offices and clearly stating you support the Clarity Act or similar pro-innovation, pro-consumer legislation.
• Paying attention to how your representatives vote (or whether they avoid voting at all) when crypto bills come to the floor.
• Supporting candidates – from either party – who understand digital assets and are willing to stand up to entrenched banking interests.

Deaton emphasizes that this is not about Republicans vs. Democrats. It’s about those in power vs. the people who aren’t. Sending genuinely pro-innovation, pro-consumer voices to Washington is how the industry – and its users – get a fair shot.

The bottom line for XRP and the wider market

The coming weeks and months around the Clarity Act will be pivotal. If Senate leadership forces a vote and the bill passes, it could mark the beginning of a new era for US crypto – one where XRP, Bitcoin, Ethereum, and other major assets operate under clear, durable rules.

That would likely unlock more institutional capital, more real-world use cases, and more confidence for builders and investors. If the bill stalls again, the US risks falling further behind while uncertainty continues to weigh on companies and users.

Either way, one thing is clear: crypto is no longer a niche topic. With tens of millions of Americans now holding digital assets, and trillions in value likely to be tokenized over the next decade, the decisions made in Washington today will shape the financial landscape for years to come.