3 Cryptocurrencies to Watch as the Clarity Act Heads to the Senate
Key Points
As two of the top blockchain networks for stablecoins, both Ethereum and Solana are likely to benefit from stablecoin provisions in the Clarity Act.
New rules that make it possible for financial institutions to adopt blockchain-based technology solutions should be a boon for XRP.
The White House has set a target date of July 4 for passage of the legislation, setting up a potential summer rally.
- 10 stocks we like better than XRP ›
Crypto investors are about to get a lot more clarity on the Digital Asset Market Clarity Act ("Clarity Act"), and it could come as soon as July 4. That could have huge consequences for any cryptocurrency directly impacted by key provisions of this landmark crypto market legislation.
The three cryptocurrencies I'm targeting right now are Ethereum (CRYPTO: ETH), Solana (CRYPTO: SOL), and XRP (CRYPTO: XRP). Here's why.
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Ethereum and Solana
Right now, two of the most important Layer-1 blockchains for stablecoins are Ethereum and Solana. Ethereum currently ranks first and Solana ranks third when it comes to total stablecoin activity. Ethereum has been the longtime market leader, but Solana has seen a massive uptick in stablecoin activity as it pivots away from meme coins.
Image source: Getty Images.
That's very important because a major provision in the Clarity Act legislation involves stablecoins. Long story short, stablecoins can pay out rewards (typically between 3% and 10% per year) just for holding them, and that makes them direct competitors to bank accounts. As might be expected, the banking industry is doing everything it can to limit the payment of these rewards.
So keep an eye on any markups to the Clarity Act involving stablecoins. The bill just went to the Senate, and it will go to the House next. The hope is that some sort of stablecoin reward compromise can be found. If stablecoin rewards get the green light from lawmakers, that would be a real boon for the future growth prospects of both Ethereum and Solana.
XRP
XRP will also likely get a boost from the passage of the Clarity Act. That's because a core focus of this legislation is making it safe for financial institutions to build on-chain. They will be allowed to integrate blockchain technology into their everyday operations, and that will benefit fintech companies such as Ripple, the creator of the XRP token. In theory, this should make the XRP blockchain ledger much more valuable.
Over the past few years, Ripple has spent nearly $3 billion on crypto- and blockchain-centric acquisitions, all aimed at making XRP the centerpiece of a global, end-to-end payment and liquidity solution. For banks and financial institutions to adopt this blockchain-based solution, however, it will require a green light from regulators. And that's exactly what the Clarity Act is supposed to provide.
July 4 fireworks for crypto investors?
The White House has put its full weight behind passage of the Clarity Act before July 4. That makes me increasingly hopeful that the three cryptocurrencies mentioned above could rally hard throughout the summer. The same phenomenon happened last summer, when the GENIUS Act for stablecoins passed.
As a result, it's important to get in now and then sit back and watch the fireworks. If all goes according to plan, your crypto portfolio could soon be lighting up the night sky.
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Dominic Basulto has positions in Ethereum, Solana, and XRP. The Motley Fool has positions in and recommends Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.
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