XRP Senate Deal Hopes Unravel, Data Shows

What to Know:

• The US crypto industry is pushing for Congress to pass the “Digital Asset Market Clarity Act of 2025” (H.R. 3633).
• Key sticking points include DeFi regulation and the treatment of stablecoin yield.
• Proponents argue the legislation is crucial for unlocking institutional business models and maintaining global competitiveness.

The US crypto sector is making a concerted effort to get Congress to approve federal market structure legislation, specifically the “Digital Asset Market Clarity Act of 2025” (H.R. 3633). This act is seen as a crucial piece of the regulatory puzzle needed for the industry to thrive, establishing a clear framework for secondary trading, asset classification, and intermediary registration. Without it, the US market risks falling behind, trapped in a web of state-level regulations and enforcement actions.

Despite industry enthusiasm, significant hurdles remain in reaching a consensus on the Clarity Act. A recent bipartisan meeting revealed divisions, particularly regarding the regulation of decentralized finance (DeFi) and the treatment of stablecoin yield, which could significantly impact the bill’s final form. Republicans are keen to move quickly, while Democrats are pushing for stricter requirements, potentially altering the landscape for token issuance and software development.

One of the primary points of contention is the regulatory approach to DeFi. Democrats are advocating for measures that would bring DeFi under traditional financial surveillance, including mandatory “front-end sanctions compliance” for DeFi interfaces. This would require developers to screen users at the point of access, raising concerns about the impact on innovation and decentralization within the crypto space.

The debate over stablecoin yield has also emerged as a critical issue. US banks are actively lobbying against allowing stablecoin issuers to pass yield from reserve assets to holders, arguing that it would drain deposits from the traditional banking system. Crypto firms, however, view this as protectionism, asserting that it stifles competition and innovation in the payments sector.

For major US crypto companies, the Clarity Act is about more than just avoiding legal issues; it’s about enabling institutional business models currently hampered by regulatory uncertainty. Clear regulations would provide the necessary foundation for offering services like custody, collateral segregation, and audit-ready operational controls at scale, attracting institutional investors and fostering broader adoption of digital assets.

As the debate continues, proponents of the Clarity Act are emphasizing the broader economic implications of passing the legislation. They argue that a clear regulatory framework will not only benefit the crypto industry but also strengthen the US financial system and enhance its global competitiveness. The urgency to act is amplified by the fact that other jurisdictions, such as Europe and Asia, are moving ahead with comprehensive crypto regulations, potentially drawing away businesses and innovation from the US.

Source: Original article