Key Takeaways
- Brad Garlinghouse, CEO of Ripple, stressed that the CLARITY Act faces a critical two-week window for progress before its passage becomes unlikely
- This proposed legislation aims to establish federal cryptocurrency regulations, dividing authority between the CFTC and SEC
- A stalemate in the Senate Banking Committee centers on whether yield-generating stablecoins should be permitted
- Despite a recent compromise proposal from Senators Alsobrooks and Tillis addressing stablecoin yields, prominent banking organizations argue the language remains insufficient
- According to Garlinghouse, failure to advance the bill before midterm campaign season could result in nearly a year-long delay
Brad Garlinghouse, the chief executive of Ripple, has issued an urgent call regarding the limited timeframe remaining to enact significant cryptocurrency legislation in the United States. During his appearance at Miami’s Consensus conference on May 5, he emphasized that congressional action is needed immediately or the chance may disappear for an extended period.
The focal point of Garlinghouse’s concerns is the CLARITY Act. This proposed measure represents what would be America’s inaugural federal framework for cryptocurrency industry regulation, establishing a division of regulatory authority between the Commodity Futures Trading Commission and the Securities and Exchange Commission.
The House of Representatives approved the measure in July 2025. However, Senate proceedings have encountered significant obstacles.
Before reaching a vote on the Senate floor, the legislation must navigate two separate committees: both the Senate Agriculture Committee and the Senate Banking Committee. While the agriculture panel greenlit its iteration in January 2026, the banking committee remains gridlocked.
Stablecoin Yield Remains Central Obstacle
The primary point of contention involves stablecoins and the question of whether these digital assets should be permitted to distribute yield payments to their holders. A compromise framework was unveiled last week by Senators Angela Alsobrooks and Thom Tillis addressing this specific concern.
Their draft proposal prohibits reward mechanisms on inactive stablecoin balances that function similarly to traditional deposit interest. However, it permits rewards connected to active participation such as staking, transactions, or trading activities.
Major banking institutions in the United States remain unconvinced. The Bank Policy Institute and the American Bankers Association released a collaborative statement on May 4 expressing concern that the compromise text continues to provide opportunities for cryptocurrency platforms to deliver deposit-equivalent returns via membership structures or balance-dependent incentives.
“The proposed language falls short of that goal,” the groups said.
Garlinghouse conceded the legislation has imperfections. “I challenge you to show me any piece of legislation that we would call perfect,” he said. “There’s tradeoffs and compromises, but I do think clarity is better than chaos.”
Campaign Season Creates Urgency
Time pressure exists for a particular reason: the upcoming 2026 midterm electoral cycle. Primary contests have already commenced, with the general election scheduled for November.
Garlinghouse warned that without a markup hearing in the Senate Banking Committee occurring within the coming fortnight, the bill faces dramatically reduced prospects for success. As campaign activities intensify, legislators become reluctant to expend political resources on intricate regulatory measures.
“If it gets into midterms, it’s going to be too much of a loaded issue,” he said. “Post-elections in the fall, I think the likelihood that it gets picked up is even lower.”
Senator Cynthia Lummis, who serves on the banking committee, stated on X on May 6 that the CLARITY Act “is the priority” and urged Senate colleagues to take action.
Although the CFTC and SEC formalized a memorandum of understanding in March designed to streamline cryptocurrency oversight coordination, both regulatory bodies are awaiting congressional passage of formal legislation before implementing substantial regulatory modifications.
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