Author:Nick Carpinito & Luke Leasure
Compiled by: TechFlow
Deep Tide Guide: Trump personally stepped in to push the CLARITY Act, but Democrats and Republicans are completely split on the issue of enforcement authority — Republicans insist on handing it to the Department of Justice, and the Attorney General candidate happens to be Trump's personal lawyer, who made $10 billion from cryptocurrency alone last year. This "self-policing" design quickly cooled market enthusiasm from Tuesday's狂欢 to Wednesday's sell-off.
On Wednesday, the market took a breather as optimism surrounding the CLARITY Act cooled following the release of a new version of the bill text in the Senate. Although cryptocurrency stocks gave back some of their recent gains, ETF inflows continued to strengthen, extending the strongest consecutive inflow streak since May. Let's step back from the noisy headlines and dissect what exactly has changed in the latest CLARITY draft and which parts are most critical for the crypto market.
Market Dynamics
Market movements diverged on Wednesday, with BTC and stock indices falling slightly, erasing gains from earlier in the week. On Tuesday, the probability of the CLARITY Act passing surged from 31% to 51%, driving double-digit spikes in crypto stocks like COIN and CRCL. However, this probability has since fallen back to 38%, dragging down crypto stocks and other indices.
Senate Republicans released updated bill text on Wednesday, codifying the moral clause into law. The market may now be pricing in the voting prospects based on the actual language, rather than just trading on headlines. The volatility in these crypto stocks shows that this sector could be the biggest beneficiary if the bill passes. Stock futures moved lower overnight, with the Nasdaq opening down -0.97%, pulling mainstream cryptocurrencies slightly lower ahead of Thursday's open.
The brief spike in CLARITY probability lifted most crypto assets. If momentum continues to build and probabilities keep rising, we should expect this legislation to act as a rising tide that lifts all boats. Moving from high uncertainty to low uncertainty is itself a positive, regardless of how stringent the eventual rulemaking might be.
Chart: CLARITY Act Passage Probability (Source: Blockworks Research)
Further supporting prices, ETFs are in their longest consecutive inflow streak since early May, attracting $750 million in net inflows over the past 5 days.
Chart: Consecutive ETF Fund Inflows (Source: Blockworks Research)
Cutting Through the CLARITY Noise
Trump broke the summer deadlock on the CLARITY Act this week, but the core battle over enforcement authority remains unresolved. A White House official told Republican negotiators that the President accepted a moral clause prohibiting senior federal officials, including himself and the Vice President, from holding personal cryptocurrency interests, moving CLARITY closer to a Senate vote. Lummis released updated text on Wednesday, merging work from the Banking and Agriculture Committees, so the moral clause is now publicly visible. However, it still does not specify who will enforce this ban, and Democrats say they have not yet seen a version they can accept.
Lummis and Moreno negotiated this moral clause package with the White House without Democratic signatures. It prohibits the President, Vice President, members of Congress, federal judges, and their spouses from issuing or sponsoring digital assets for compensation during their terms. The clause will expire on January 20, 2029. Affected officials must sell their cryptocurrencies and shares in crypto companies or transfer them into blind trusts they cannot control. Republicans gave civil enforcement authority to the Department of Justice, including the power to sue exchanges listing prohibited tokens. Intermediaries face fines of up to $250,000 per violation per day, while the officials themselves face disgorgement of profits plus a fine of $500,000 or 10%. Sales over $1,000 require disclosure, and the Government Accountability Office (GAO) will study remaining loopholes.
The two sides are split on enforcement. Senate Democrats want state attorneys general to oversee the restriction. The White House and Republicans want it enforced by the federal Attorney General and the Department of Justice. Democrats argue that relying solely on federal enforcement is ineffective for a President — whose former personal lawyer, Todd Blanche, is awaiting Senate confirmation as Attorney General candidate, with disclosure documents showing he earned over $10 billion from crypto income last year. Senator Angela Alsobrooks called DOJ-only enforcement "not serious." Pressure is also coming from the left. Indivisible and Demand Progress have been pressuring Senate Democrats, including Kirsten Gillibrand, this week to reject a weak ethics agreement. And these are precisely the votes Republicans need to reach 60.
The rest of the bill text remains largely unchanged. Industry insiders say the *Blockchain Regulatory Certainty Act* is unchanged from the May Banking Committee version, continuing to exclude non-custodial developers and infrastructure providers from the definition of money transmitters; the Lummis-Grassley amendment retains criminal liability for those who knowingly assist illegal transactions, and the *Protect Your Coins Act* protects self-custody rights. The stablecoin yield section retains the Tillis-Alsobrooks compromise, prohibiting interest on idle stablecoin balances but allowing activity-based rewards. A new enforcement chapter provides funding for state and local crypto investigations and establishes a cybersecurity center targeting North Korea and Iran; it also requires stablecoin issuers to comply with lawful freeze and seizure orders. Bankruptcy provisions treat customer assets as customer property, not assets of a failed custodian — a direct response to FTX.
Time Window: Less Than Three Weeks
Less than three weeks remain. Majority Leader John Thune has committed to scheduling a floor vote before the recess expected to begin around August 7th. The Senate vote is only one hurdle. The House will take up the revised version after returning in September, followed by presidential signing and subsequent rulemaking by the CFTC and SEC.
Chart: CLARITY Act Timeline & Moral Clause Sunset (Source: Blockworks Research)
How the Market Prices a "Vote"
Traders price "the vote" and "the outcome" separately. The probability of a Senate vote before recess is near 72% on Kalshi, but volume is only $31k, thin enough to ignore. On Polymarket, the probability of "enacted into law by 2026" is near 41% ($2.4 million volume), while the deeper market on Kalshi for "crypto market structure law by year-end" is near 42% ($3.6 million volume). These two deepest markets differ by 10 percentage points on essentially the same question, and neither prices enactment probability above 50%. The claim that "passage probability exceeds 50%" sits squarely at the optimistic edge of this range.
Chart: Kalshi vs. Polymarket Pricing of CLARITY Enactment Probability (Source: Blockworks Research)
Chart: Crypto Market Structure Legislation Probability Markets (Source: Blockworks Research)
This Week's Loudest, Shallowest News
The loudest thing this week is also the shallowest. An unverified rumor claimed that CLARITY would implement geographic blocking for US users at the RPC layer and enforce it against specific wallets, portraying it as a negative for HYPE; paired with an unverified claim that Multicoin sold about $120 million worth of HYPE before its July 28th unlock. Multicoin's Tushar Jain confirmed a large unstaking on Wednesday but stated the firm had not exited, attributing it to privacy-driven "wallet rotation" rather than selling. No one has produced draft text supporting such a geo-blocking mechanism, and the version Lummis released Wednesday contains no such clause.
Read & Listen
Helium Q2 Token Holder Report
Blockworks interprets this quarter as a "pricing reset" rather than a demand collapse: after HIP-143 slashed operator pay rates from $0.50/GB to ~$0.10/GB on June 4th, offload volumes grew about 20% quarter-over-quarter during the transition. DC-burn revenue reported $3.35 million, down 14%; Blockworks points out that the headline metric of "2.2x revenue coverage of emissions" is emission-driven — because HNT emissions fell 39% to $1.5 million while the revenue line itself declined, so the ~1.7x exit velocity is a cleaner forward-looking reading. Post-quarter, HIP-149 approved by veHNT shifted deployer rewards to usage and retired Proof-of-Coverage, funded by a ~141 million HNT self-terminating supplement that flips the network from deflation to net issuance — a key test for whether Helium's pure operator model can become self-sustaining.
Chart: Helium Q2 Token Economics Data (Source: Blockworks Research)
Stablecoins Hit the Ramp
Ramp partnered with Privy to add a stablecoin rail to its payments platform, allowing businesses to open "stablecoin accounts" holding cash-backed USDC or USDT, earn rewards up to 3.25%, and pay supplier wallets in over 140 countries, or convert into over 40 fiat currencies. Stablecoins also become a standalone payment method in "Bill Pay": businesses can fund spend with USD bank accounts, Ramp handles the conversion before sending, no balance needed. Ramp says over 1000 businesses have paid suppliers this way, with over 70% of transaction volume occurring outside traditional banking hours — a data point that captures the core selling point: 24/7 settlement in the face of wire cut-off times and cross-border delays.
Chart: Ramp Stablecoin Payment Rail (Source: Blockworks Research)
Dollar to Earn, Not Dollar to Move
John Conneely, Global BD Lead at Sky, argues stablecoin leaderboards track the wrong numbers — mixing payment dollars and savings dollars in a single race, when they compete for different shelf space. His argument for USDS/sUSDS rests on "where the yield is": governance publishes the Sky Savings Rate, native to the asset itself; while payment dollars like OUSD leave returns in a distribution protocol decided by the platform. He anchors the argument in Sky's $13.96 billion collateral book across 40+ positions, including $4 billion in stablecoin reserves, $1.5 billion in tokenized treasuries via BlackRock's BUIDL and Janus Henderson Anemoy, and nearly $3 billion in on-chain and OTC crypto lending, making "allocation" rather than "supply" the metric determining the savings race. Read this as Sky's BD case, not a neutral survey; Conneely notes the views are his own, not the Sky Frontier Foundation's.
