Key highlights:
- Matt Hougan said the CLARITY Acts failure does not affect the crypto market
- The Senate rejected a cloture vote on the crypto bill on Sept. 15
- Bernstein analysts expect U.S. regulators to move quickly with new crypto rules
Bitwise Chief Investment Officer Matt Hougan took back his previous warning that failure of the CLARITY Act would drag the crypto market into another bear phase, saying instead that the setback is unlikely to derail the current rally.
CLARITY Act delay just a “speed bump”
Hougan said in a memo published Sept. 16 that he no longer sees another bear market stretch for crypto even with the bill stalling in the Senate.
The CIO had previously compared the CLARITY Act to cryptos version of Punxsutawney Phil, a groundhog used to predict how long winter will last, warning that a failed vote could start a much steeper bear market.
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After reviewing how Bitcoin‘s price moved in the past couple of weeks leading up to the vote, along with new product launches from financial firms, he revised that view, now describing the Senate’s action as “a speed bump, not a roadblock.”
Hougan detailed his thesis between two parallels. According to data from Bitwise, Bitcoin bottomed near $57,950 on July 1 before climbing above $80,000 by Sept. 4.
In the same period, prediction market Polymarket showed that the odds of the CLARITY Act becoming law in 2026 fell from 39% to 18%. Hougan said this divergence undercuts his previous assumption that the legislation‘s passage was needed for the crypto market’s recovery.
The bitcoin rally will continue until the debt situation improves.
The Senate rejected a motion to proceed with the CLARITY Act on Sept. 15. The official roll call recorded 49 votes in favor and 50 against, with one senator not voting.
Wall Street isnt waiting on Washington
Hougan highlighted a trend among institutions as evidence that financial firms havent been holding off on crypto products while waiting for Congress to act.
“Over the past quarter, weve seen Robinhood launch its own blockchain, Morgan Stanley launch a Solana ETF, and DTCC settle its first batch of tokenized stock trades.”
He had repeatedly mentioned throughout the current market cycle that the rally driving crypto prices higher was thanks to adoption. Hougan pointed to the strong exchange-traded fund inflows, corporate treasury allocations, and traditional asset managers building out crypto infrastructure as top reasons.
Bernstein expects regulators to step in
Analysts at Bernstein said in a note that they expect “aggressive and swift” rulemaking from the SEC and the CFTC to help make up for the lost time on the CLARITY Act. The analysts said the agencies should issue new rules covering the important sectors of the crypto space.
This includes how tokens are classified for capital raising, protections for developers working on DeFi and self-custodial protocols, exemptions meant to encourage innovation in equity tokenization, among others.
Bernstein said these would help provide clarity for the industry even without the CLARITY Act, which the firm noted would have offered protection against new political administrations that agency rulemaking alone cannot replicate.
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Hougan also suggested the same notion in his note, that crypto is positioned to benefit from the “extraordinarily pro-crypto SEC and CFTC” until 2029.
“That is the reality that will sink in for investors over the next few days. Crypto has been in a ‘heads we win big; tails we still win’ scenario on regulation. Until a new administration takes over in Washington, the SEC and CFTC will have free rein to set the agenda for crypto.”