Crypto Industry Sees Unexpected Boost from Failed Senate Bill

Bitwise Chief Investment Officer Matt Hougan believes that the collapse of the CLARITY Act in the US Senate has had an unexpected positive effect on digital assets. The bill, which aimed to regulate stablecoins and other aspects of the crypto industry, failed to pass with a procedural vote of 49-50 on September 15.

Hougan framed this outcome as a 'blessing in disguise' in his memo to clients, citing the fact that Bitcoin rose 8% in the days following the vote and Ether climbed 7%. He argued that the status quo, however messy it may be, leaves the industry with more commercial flexibility than the statute would have allowed.

The proposed legislation would have restricted stablecoin issuers from paying interest and imposed fines of up to $5 million per violation. However, under the current framework, exchanges such as Coinbase can continue offering rewards tied to customers' stablecoin balances.

Hougan also noted that the failure of the CLARITY Act has left in place a competitive shield for incumbent exchanges. The legislation would have created a national licensing regime and restricted firms from combining exchange and brokerage services, which could have raised operating costs for established platforms.