Crypto Industry Sees Rally After Clarity Act Failure

Bitwise CIO Matt Hougan says the crypto market's recent rally is a sign that it has benefited from the failure of the Clarity Act, a bill aimed at providing long-term regulatory certainty for the industry.

The Senate failed to advance the bill on September 15, with the procedural vote falling short of the required 60 votes. Since then, Bitcoin has gained around 8%, Ether by 7%, and tokens like NEAR, Uniswap, and Avalanche have seen substantially larger gains.

Hougan argues that the market's response makes sense when considering what would have been included in the bill. For example, the GENIUS Act prohibits stablecoin issuers from paying interest or yield, but it does not explicitly restrict rewards offered by intermediaries like exchanges. This could have benefited platforms like Coinbase, which uses stablecoin rewards to attract customers.

The Clarity Act was also designed to create a more comprehensive federal market structure for digital assets, potentially reducing regulatory barriers for new competitors. However, with the legislation stalled, established crypto exchanges may retain advantages built through their existing state licenses and infrastructure.