Bitwise Chief Investment Officer Matt Hougan says the failure of the CLARITY Act in the Senate is unlikely to derail crypto’s current bull market, arguing that Bitcoin’s recent rally was already taking place as the bill’s chances of passage declined.
The Senate rejected cloture on the Digital Asset Market Clarity Act on Tuesday in a 49 to 50 vote, falling short of the 60 votes required to advance the legislation.
Hougan pointed to Bitcoin’s performance since July as evidence that the market was not dependent on the bill. Bitcoin rose from $57,950 on July 1 to above $80,000 on September 4, while Polymarket odds of the CLARITY Act becoming law this year fell from 39% to 18% over roughly the same period, according to Bitwise.
“If the bull market depended on Clarity’s passage, you would have expected falling odds to mean falling prices,” Hougan wrote.
He also argued that major financial firms have continued expanding into crypto despite uncertainty around the legislation. Robinhood launched the mainnet of its own blockchain in July, Morgan Stanley launched Ethereum and Solana exchange traded products later that month, and DTCC completed production trades using tokenized securities.
Hougan said the regulatory focus could now shift toward the SEC and CFTC, which retain the ability to pursue crypto rules within their existing statutory authority.
The SEC proposed Regulation Crypto Assets in August, creating a proposed framework for certain investment contracts involving digital assets.
The agency took another step Thursday, two days after the Senate vote, by approving a temporary Innovation Exemption that allows qualifying venues to facilitate onchain trading of tokenized US stocks under specified conditions. SEC Chair Paul Atkins explicitly linked the move to Congress failing to advance the CLARITY Act earlier this week.
CFTC Chair Michael Selig has also said the agency is prepared to move forward with crypto market structure rules using its existing authority if legislation does not advance.
Hougan acknowledged that agency rulemaking does not provide the same durability as legislation. Future administrations could reverse regulatory policy, while Congress would still be required to give the CFTC broader authority over crypto spot markets.
Bitcoin fell about 4% following Tuesday’s vote as crypto markets also faced pressure from interest rate and oil concerns. Hougan nevertheless characterized the CLARITY setback as a temporary obstacle rather than an end to the broader market trend.
