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Ripple supports the CLARITY Act primarily because it offers crucial regulatory certainty by explicitly defining its native token XRP as a non-security, which would end years of legal battles and uncertainty. In contrast, Coinbase withdrew its support due to specific provisions in the latest draft, such as a de facto ban on stablecoin yield products, which the company argues would harm its business model and the broader U.S. crypto industry.
Ripple's Position
Ripple has consistently argued that regulatory clarity is preferable to the current uncertain environment where rules are often enforced by litigation.
XRP Classification: A key provision in the Act would codify XRP's status as a "digital commodity" rather than a security under federal law, putting it on similar regulatory footing as Bitcoin and Ethereum.Institutional Adoption: This clarity is expected to attract more institutional investors and major financial institutions who have previously avoided XRP due to the risk of regulatory backlash, potentially unlocking new capital flows and broader market integration.Settlement Utility: Ripple's business model is centered on using the XRP Ledger for fast, low-cost cross-border payments, a utility-focused application that aligns with the Act's "digital commodity" definition.
Coinbase's Position
Coinbase CEO Brian Armstrong expressed the view that "no bill" is better than a "bad bill" if it includes overly restrictive provisions that could stifle innovation and harm consumers.
Stablecoin Rewards: The primary point of contention for Coinbase was a new provision that would ban stablecoin issuers from offering yield or interest to token holders. A significant portion of Coinbase's revenue relies on these rewards, which banks have lobbied to restrict to protect their own deposits.DeFi and Data Access Concerns: Coinbase also raised concerns about potential restrictions on decentralized finance (DeFi) activities and provisions that could allow extensive government access to user financial data, fearing the bill could worsen, not improve, the regulatory landscape.Balancing Innovation: The company believes the current draft heavily favors traditional banking interests and does not provide a fair competitive environment for innovative crypto products and services.
The CLARITY Act, formally known as the Digital Asset Market Clarity Act of 2025 (H.R. 3633), has passed the House of Representatives but remains in the Senate, where debate and amendments are ongoing.
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