Clarity Act Is the Missing Piece: Without It, Even XRP’s Victory Isn’t Enough

It is no news that Ripple’s legal battle with the SEC is over, and XRP secured one of the most important court victories in crypto history. That outcome removed years of uncertainty surrounding Ripple’s business and XRP’s status on public exchanges. Even so, the case has exposed a much bigger issue that still affects the entire digital asset industry.

Current U.S. crypto regulation continues to rely heavily on court decisions instead of laws written specifically for blockchain technology. That leaves companies, developers, and large financial institutions waiting for clearer legal definitions before making bigger commitments. Many supporters of the CLARITY Act believe that legislation is now the final piece needed to complete the regulatory picture.

XRP’s Legal Victory Closed the SEC Case but Not the Regulatory Debate

Ripple’s legal dispute with the SEC stretched across almost 5 years and produced several landmark decisions that continue to shape the crypto industry today.

December 2020: The SEC sued Ripple Labs, alleging the company raised $1.3 billion through unregistered XRP sales.

July 2023: Judge Analisa Torres issued a landmark ruling that changed the direction of the case. The court found that XRP sales to institutional investors violated securities laws. Retail XRP sales on public exchanges, however, did not constitute securities transactions. The ruling became one of the most important legal victories ever secured by a crypto company because it established that XRP itself was not automatically a security whenever it changed hands.

October 2023: The SEC dropped all personal charges against Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen. That decision removed another major legal hurdle for Ripple’s leadership.

August 2024: Judge Torres ordered Ripple to pay a $125 million civil penalty for institutional XRP sales. The amount came in far below the SEC’s original request of $2 billion.

Late 2024: The legal fight continued after the SEC appealed the portion of the ruling involving retail XRP sales. Ripple also filed a cross appeal over other parts of the judgment.

March 19, 2025: Ripple CEO Brad Garlinghouse announced that the SEC had decided to withdraw its appeal after new SEC leadership moved away from the previous enforcement-focused strategy. Around the same period, the agency also ended or significantly reduced enforcement actions involving Coinbase, Uniswap, Robinhood, OpenSea, Kraken, and Consensys as regulators began moving toward a more rules-based framework.

June 2025: Ripple and the SEC jointly asked the court to reduce Ripple’s penalty from $125 million to $50 million and remove the remaining injunction. Judge Torres rejected that request and ruled that the parties could not erase a final federal court judgment through a negotiated settlement.

August 7, 2025: Ripple and the SEC officially withdrew their appeals before the U.S. Court of Appeals for the Second Circuit. Ripple agreed to pay the original $125 million penalty, the permanent injunction on future institutional XRP sales remained in place, and the lawsuit officially came to an end.

Today, the case is legally closed under the doctrine of res judicata, which means the SEC cannot reopen the same lawsuit against Ripple. Even so, the broader regulatory landscape has not changed nearly as much as Ripple’s courtroom victory might suggest.

Vincent Van Code Says the CLARITY Act Is the Final Piece Missing for XRP and Crypto

XRP community commentator Vincent Van Code believes Ripple’s courtroom victory is only part of the solution. Writing on X, he argued that the CLARITY Act is far more important than many investors realize because it could establish the clear legal framework that the entire crypto industry has lacked for years.

Vincent Van Code explained that the SEC has been able to pursue enforcement actions against crypto companies largely because existing U.S. laws never clearly defined how digital assets should be regulated.

Without specific legislation, companies often face uncertainty over whether a token could later be treated as a security. That uncertainty forces many businesses to reduce their blockchain ambitions or avoid certain projects altogether because the legal risks remain difficult to predict.

He used token launches as one example. A blockchain company may issue tokens to fund development of its network, but regulators could still interpret those sales as securities offerings under legal standards that date back many decades.

Vincent Van Code argued that laws developed during the early 1900s, including the Howey Test, were never designed to evaluate decentralized blockchain networks and modern digital assets.

Vincent Van Code also pointed out that the SEC’s friendlier stance under current leadership still does not provide permanent certainty. Even though SEC Chairman Paul Atkins has publicly indicated that the agency is not pursuing enforcement actions against crypto firms operating as commodities, future leadership could adopt a completely different position.

Court decisions can also vary from one case to another. That uncertainty remains a major concern for large financial institutions considering wider adoption of XRP and other digital assets.

Another important point raised by Vincent Van Code focuses directly on Ripple. He argued that even Judge Analisa Torres’ landmark ruling stating that XRP itself is not a security still does not provide the level of legal certainty required by banks and multi-billion-dollar financial institutions.

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Comprehensive legislation passed by Congress would carry much greater weight because it would establish clear definitions for securities, commodities, and digital assets across the entire industry.

Vincent Van Code believes the CLARITY Act represents the final stage of the crypto industry’s regulatory journey in the United States. He also warned that failing to pass the legislation during 2026 could encourage more blockchain companies to establish operations in the European Union, where comprehensive crypto rules already exist.

The CLARITY Act Faces an Important August Deadline

The CLARITY Act remains under active consideration in Congress, although lawmakers have already missed one important milestone.

The legislation was widely expected to reach President Donald Trump’s desk before July 4, 2026, after White House digital assets adviser Patrick Witt expressed optimism earlier this year. That deadline passed without Senate approval. Lawmakers are currently observing their Independence Day recess and are expected to return on July 13.

Attention has now turned to August 7, which marks the Senate’s final working day before its summer recess. Many observers believe another delay beyond that date could slow the legislation considerably because Congress will soon begin focusing more heavily on the midterm election season.

Several political issues continue to complicate negotiations. Senate lawmakers are still working to combine separate versions of the bill produced by the Senate Banking Committee and the Senate Agriculture Committee.

Democratic lawmakers have also pushed for stronger ethics provisions after financial disclosures showed President Donald Trump’s crypto businesses generated about $1.4 billion during 2025. Senators including Adam Schiff, Elizabeth Warren, and Ruben Gallego want stricter anti profiteering measures before supporting the legislation.

Read Also: Demand for XRP Is Coming from Every Angle: $4B in Assets, ETF Inflows, and New Wallets

Traditional banking organizations continue to oppose certain parts of the bill as well. Much of their concern centers on provisions that would allow crypto companies to offer rewards on stablecoin balances. Banks argue those incentives could encourage customers to move deposits away from the traditional banking system.

Support for the legislation has still grown in recent weeks. The National Organization of Black Law Enforcement Executives became the first major U.S. law enforcement organization to endorse the CLARITY Act on July 1, 2026.

The organization cited the bill’s anti-money laundering provisions and consumer protection measures when announcing its support. Prediction markets also showed the perceived probability of the bill passing during 2026 recovering to roughly 47% to 55% after falling below 40% only a week earlier.

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