Matt Hougan, CIO of Bitwise, published a detailed commentary regarding the situation around the CLARITY Act—a bill for regulating the US cryptocurrency market. According to Senate rules, senators had to file a motion to end debate by Wednesday, August 5th, for the bill to have a chance of being voted on before the August recess, which starts on August 7th and lasts until September 14th.
It is commonly accepted that if Congress does not vote before the August recess, the bill is effectively dead, as legislators will shift their focus to the November elections, the expert noted.
Why the CLARITY Act Won't 'Die' Completely?
Hougan believes that failure this week does not mean the end of the CLARITY Act. Instead, the bill will enter a state of being a 'living dead'—with discussions of adoption in September or December.
The analyst notes that the uncertainty around the CLARITY Act is already keeping some professional investors on the sidelines: they do not want to invest capital only to later see the bill fail and the market crash.
"The best thing that could happen if the CLARITY Act doesn't pass this week is that the chances of adoption drop even lower—to at least 10-19%—so that we can leave this uncertainty behind. If that happens, the market might wobble for a minute, but it will set us up for a rally in the fall," he notes.
The best scenario for the market is the adoption of the CLARITY Act. According to Hougan's assessment, in that case, cryptocurrency would enter a new bull market.
Cryptocurrency Will Develop Even Without the Law
Hougan believes that even without the CLARITY Act, the industry will find a way forward. SEC Chairman Paul Atkins stated in a recent CNBC interview that the regulator is "ready, willing, and able to develop rules that will address the same issues as the CLARITY Act."
In the short term, such rules from the SEC under Atkins' leadership, in Hougan's opinion, might even be more favorable for cryptocurrencies and innovation than the bipartisan bill. The risk is that a future administration could appoint a less friendly SEC chairman and overturn them.
However, Hougan believes that no SEC chairman will be able to stop progress now: BlackRock's most profitable ETF is a Bitcoin ETF, Nasdaq and JPMorgan are aggressively moving towards asset tokenization, Visa, Mastercard, and Stripe are teaming up with Coinbase to launch a stablecoin platform, and Robinhood has launched its own blockchain with DeFi app integration.
To illustrate, Hougan draws an analogy with the 1994 telecommunications reform: The House of Representatives passed it with a vote of 423 to 4, but it died in the Senate without a vote. The internet didn't wait for Congress: Netscape launched, Amazon and eBay opened. Congress only caught up with the process two years later—and, looking back, it's unclear whether that delay actually slowed anything down.
"Cryptocurrency already has enough momentum to transform finance for decades, regardless of what happens in the next few days," Hougan concludes.
As a reminder, Bitwise previously named the main theme of the new bull cycle.
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