The failure of the Clarity Act to advance in the U.S. Senate has produced a counterintuitive outcome: instead of derailing the crypto rally, it accelerated a series of agency-level regulatory wins, according to Bitwise Chief Investment Officer Matt Hougan.
On September 15, the Senate blocked a procedural effort to advance the bill, with the vote falling short of the 60-vote threshold needed to proceed; 49 senators voted in favor and 50 voted against. Many analysts expected the setback to erase the gains made in the preceding month. Instead, the market moved higher. Bitcoin is up nearly 11% over the 30-day period, Ether has added roughly 12%, and smaller tokens such as NEAR, Uniswap, and Avalanche posted even larger percentage gains. Total crypto market capitalization climbed from about $2.65 trillion on September 15 to around $2.95 trillion, an increase of roughly 11%.
In a memo published Wednesday, Hougan argued that the collapse of the legislative push allowed crypto to avoid compromises that would have constrained large parts of the industry. The final bill would have barred platforms from paying customer interest or yields on stablecoin balances. With the Clarity Act stalled, exchanges like Coinbase can continue offering rewards under the existing GENIUS Act framework. The legislative impasse also preserves a competitive moat for incumbent exchanges because the proposed national licensing path for would-be rivals was not enacted.
Regulatory activity filled the void quickly. Two days after the Senate vote, the Securities and Exchange Commission approved a five-year innovation exemption allowing limited trading of tokenized U.S. stocks through onchain platforms, including permissioned automated market makers and liquidity pools, without registering as national securities exchanges. Qualifying liquidity providers also received conditional relief from dealer registration rules.
On September 25, SEC staff issued additional guidance on token buybacks, clarifying that announcing a buyback for an already functioning crypto network would not itself make a token sale an investment contract under the Howey test. Hougan said this guidance substantially lowers regulatory exposure for protocols such as Hyperliquid, NEAR, and Uniswap, which tie protocol revenues to supply burns and buybacks.
The main trade-off is durability. JPMorgan analysts observed that agency actions lack the permanence of federal statutes because future administrations can overturn them and courts can challenge them. Hougan acknowledged that risk but suggested that deeper institutional integration of these financial rails could make unwinding the guidance politically and operationally difficult. Comprehensive digital asset market structure legislation is now effectively deferred until the next Congress. For now, he wrote, “Crypto sacrificed long-term certainty and got better rules, faster.”
