XRP News Today: Senate Stalemate Leaves Crypto in Regulatory Limbo, DeFi at Risk

The U.S. cryptocurrency regulatory landscape is at a crossroads, with the fate of the Digital Asset Market Clarity Act (CLARITY Act) hanging in the balance amid Senate negotiations, Democratic proposals to restrict decentralized finance (DeFi), and delays in crypto ETF approvals. The House's overwhelming passage of the CLARITY Act in July 2025-294 to 134-set a pro-crypto tone, but Senate inaction and partisan disputes have left the industry in limboThe Clarity Act is Probably Dead: Here's What's Next for …^[1].

The Senate's version of market structure legislation, which aims to clarify jurisdictional boundaries between the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), faces significant hurdles. While House leaders like Republican Majority Whip Tom Emmer have urged the Senate to adopt the CLARITY Act "as-written," Senate negotiators are crafting their own bill, which may prioritize Democratic concernsThe Clarity Act is Probably Dead: Here's What's Next for …^[1]. Senator Kirsten Gillibrand, a key bipartisan negotiator, acknowledged that the "fiscal cliff" negotiations over a potential government shutdown are diverting attention from crypto legislationThe Clarity Act is Probably Dead: Here's What's Next for …^[1]. With the Senate's 60-vote threshold requiring bipartisan consensus, the path to final passage remains unclear.

Adding complexity, the Senate Agriculture Committee's 182-page discussion draft-focused on commodity aspects of crypto-has yet to address DeFi and stablecoin oversight, leaving gaps in the regulatory frameworkThe Clarity Act is Probably Dead: Here's What's Next for …^[1]. Republican Senator John Kennedy of Louisiana has criticized the draft as premature, signaling potential delays.

Democrats have introduced proposals that critics argue could effectively ban DeFi, a core component of crypto innovation. A leaked Democratic counter-proposal would empower the Treasury to maintain a "restricted list" of DeFi protocols deemed high-risk, imposing Know Your Customer (KYC) requirements on non-custodial wallets and frontends. This has drawn fierce opposition from Republicans and industry stakeholders, who argue it undermines decentralization and drives innovation overseas.

Senate Banking Committee Chair Tim Scott (R-S.C.) called the proposal "incoherent" and "not a good-faith effort," while crypto industry leaders like Coinbase CEO Brian Armstrong labeled it "bad, plain and simple". The Blockchain Association warned the restrictions would "set U.S. crypto innovation back," potentially pushing DeFi development to jurisdictions like Singapore or Dubai.

Meanwhile, the U.S. government shutdown has stalled SEC reviews of spot ETFs for XRP, Solana (SOL), and Cardano (ADA), delaying long-anticipated market productsXRP ETF Approval Delayed as 3 Major Filings Await SEC Resumption^[4]. Legal expert Greg Xethalis clarified that October deadlines for ETF filings are procedural and do not reflect actual launch datesXRP ETF Approval Delayed as 3 Major Filings Await SEC Resumption^[4]. Despite this, optimism persists: analysts note that once the SEC resumes operations, XRP ETFs-backed by firms like Bitwise and Grayscale-could be prioritized, potentially unlocking institutional investmentSEC Confirms Review Acceleration for XRP, ADA, and SOL ETF …^[5].

The SEC's recent decision to expedite reviews of altcoin ETFs, including XRP and SOL, signals a shift toward market maturationSEC Confirms Review Acceleration for XRP, ADA, and SOL ETF …^[5]. However, the shutdown has frozen these processes, with approvals now expected after the government reopens.

The CLARITY Act's eventual passage hinges on resolving Senate negotiations and reconciling partisan priorities. If enacted, the bill would establish a three-tiered framework for digital assets-digital commodities, investment contracts, and stablecoins-assigning regulatory authority to the CFTC, SEC, and banking regulators. However, critics warn that the Act's carve-outs for secondary market transactions and DeFi exemptions could create regulatory arbitrage risks.

For now, the crypto industry faces a prolonged regulatory twilight. As Senator Cynthia Lummis noted, the final Senate bill may not reach President Trump's desk before year-endThe Clarity Act is Probably Dead: Here's What's Next for …^[1]. With institutional investors on hold and DeFi advocates mobilizing against restrictive measures, the coming months will test Congress's ability to balance innovation with oversight.

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