Former Ripple CTO and chief architect of the XRP Ledger, David Schwartz, has recently made a connection between the failure of the CLARITY Act and lobbying efforts from the traditional financial sector. The CLARITY Act, a key crypto bill, failed to secure the necessary votes in the U.S. Senate, with 49 in favor and 50 against. Schwartz believes that American politicians are using public concern as a cover to protect the dominance of commercial banks.
Schwartz’s comments were prompted by a speech from Republican Senator Josh Hawley, who voted against the bill citing concerns about the impact on the regional economy. Hawley expressed fears that legalizing yield-bearing stablecoins could lead to a mass outflow of deposits from small Missouri banks, affecting local farmers’ access to capital for loans. Schwartz criticized Hawley’s stance, stating that the real motivation behind the opposition to the bill is to protect bank profits.
In Schwartz’s opinion, if banks were to lose their ability to make loans, it would create an opportunity for a new digital ecosystem of investors willing to lend directly to the real economy on market terms. Despite this, Senators Tillis, Moran, and Collins voted against their party’s stance, aligning themselves with the banking lobby and the American Bankers Association.
Meanwhile, regulatory hurdles have also impacted Ripple investment products, including the delayed launch of Teucrium’s 2x Short Daily XRP ETF. The SEC has postponed approval of the ETF, which is designed to profit from a decrease in XRP’s price, for the 19th time until October 11. This delay has highlighted Washington’s conservative stance on cryptocurrency regulation.
Despite the regulatory challenges, Teucrium’s 2x Long Daily XRP ETF, a bullish fund, has been operating successfully with $151 million under management. Schwartz reacted to the delay with humor, expressing his anticipation of opening a short position once the bureaucratic processes are completed.
As the regulatory landscape in the U.S. remains uncertain, XRP’s price has experienced a moderate decline, correcting towards $1.29. The market continues to navigate the challenges posed by regulatory uncertainty and lobbying efforts from the traditional financial sector.