A Bitwise memo argues the failure of the CLARITY Act helped the industry. Days earlier, SEC staff narrowed one of the regulatory wins it cites.
When the Senate failed to advance the CLARITY Act on , the crypto industry lost the market-structure law it had spent years pursuing. Bitwise Chief Investment Officer Matt Hougan now argues the loss was a blessing.
In a memo published , Hougan contends that crypto rallied after the 49-50 vote because the bill's compromises died with it, including a ban on stablecoin rewards, while regulators moved faster on their own. He points to progress at the Securities and Exchange Commission and the Commodity Futures Trading Commission on tokenized stocks and token buybacks.
The win that shrank
One of those wins has already narrowed. SEC staff guidance had said that announcing a token buyback does not by itself create an investment contract "for functional networks." On , the SEC updated its staff FAQ to limit that answer to systems "with no central party."
The change illustrates the weakness in the "faster wins" thesis. Staff guidance can be revised without notice or public comment, and this one was revised within days. A statute would have required an act of Congress to change.
A thinner commission
The durability question grows sharper this week. Commissioner Hester Peirce departs on , leaving a two-member commission. Administrative gains granted by a small commission are easier to reverse after a change in leadership, and the midterm elections are five weeks away. Hougan himself acknowledges that the rules could change.
The cost of the failed bill
The industry did not lose cheaply. Crypto companies spent about $8 million lobbying for CLARITY in the first half of the year. The return on that spending, measured by enacted law, was zero, which is part of why the pivot to agency action has become the industry's main strategy.
The CFTC's alternative track
The other regulator is moving too. A CFTC proposal titled "Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets" has been under review at the White House Office of Information and Regulatory Affairs since . Its text is not yet public. CFTC Chairman Michael Selig has said the agency has "other tools in the box if the bill doesn't pass," and a formal market framework from the derivatives regulator would be the most durable of them, because a finalized rule is harder to unwind than staff guidance.
What to watch
The test of Hougan's thesis is whether regulator-made gains survive without a statute. A finished CFTC rule would strengthen his case. Further narrowing of SEC staff positions after Peirce's departure would weaken it.