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UNI Bitwise Chief Investment Officer: The failure of the CLARITY Act has actually benefited the crypto market,"too big to fail"
According to Bitwise Chief Investment Officer Matt Hougan, the failure to pass the US CLARITY Act may benefit the cryptocurrency industry. After years of negotiations, the bill failed to garner the 60 votes needed in the U.S. Senate to advance. However, its failure did not hit the crypto market, but triggered a strong rebound in various digital assets.
Surprise victory in Washington
Bitcoin and Ethereum both rose about 11% after the vote. According to Hougan, some other tokens performed even more prominently: NEAR surged 125%, Uniswap rose 49%, and Avalanche rose 44%. The reaction seemed surprising because the crypto industry had previously strongly supported the bill. Hougan said the industry had wanted the legal certainty promised by the CLARITY Act, but the final version of the bill also contained compromise provisions that could impose new restrictions on crypto companies.
stablecoins are one of the main affected areas. The executive explained that the proposed legislation would restrict platforms from paying customers interest or rewards on stablecoin balances. As the bill stalled, existing stablecoin rules remained unchanged. Hougan pointed out that this could benefit companies such as Coinbase that use stablecoin rewards to attract users.
The CLARITY Act originally planned to establish a national licensing system for spot crypto exchanges and could impose restrictions on how exchanges can combine trading and brokerage services. As the bill stalled, existing exchanges like Coinbase and Kraken temporarily avoided the changes.
Hougan believes that instead of waiting for new legislation and lengthy research, the U.S. Securities and Exchange Commission (SEC) has recently allowed certain tokenized U.S. stocks to be traded through blockchain-based systems under interim rules. This may give tokenizing companies the opportunity to test the technology earlier in the real market.
Income-generating tokens are another area that would benefit from clearer regulatory guidance. Several tokens, including NEAR and Uniswap, performed strongly by using agreement revenue for token buybacks. The SEC also clarified that once the blockchain network is operational, announcing a repurchase program will not in itself make tokens securities.
Although regulatory risks remain-policy changes may occur after the new administration takes office, and future SEC or Commodity Futures Trading Commission leadership may take a more stringent stance on crypto-Hougan predicts that "the crypto industry is too big to be destroyed."
Progress under existing rules
Strategy co-founder and former CEO Michael Saylor has a different view of the failure. He recently argued that the crypto industry would do better by working with supportive regulators in the SEC, CFTC, Treasury and banking institutions than by accepting the restrictive clauses in the final version of the bill.
Saylor believes that the industry should use the next few years to build compliant encryption products under existing rules, rather than rushing to accept compromises in order to push legislation through. His focus is on products that reduce costs, expand access and give users more control over their funds.
