Waning Backing for Clarity Act Could Chill Crypto Rally, Bitwise Warns

Crypto at a crossroads as backing for Clarity Act fades, Bitwise warns Crypto investors may be headed for a pivotal moment, according to asset manager Bitwise. In a Monday blog post, Bitwise warned that momentum behind the Clarity Act — a key piece of crypto market-structure legislation — is waning, and that a stalled bill could turn the current speculative bull run into a protracted “show me” phase for the industry. The Senate Agriculture Committee delayed its crypto market-structure markup from today to Thursday, citing a U.S. winter storm. The hiccup comes as momentum behind the Clarity Act appears to be slipping: Polymarket traders priced the bill’s chance of passage at roughly 80% in early January, but that probability has fallen to about 50% after high-profile pushback. Coinbase CEO Brian Armstrong has publicly called the current draft “unworkable,” saying his firm withdrew support after spotting provisions that could harm consumers and stifle competition. Bitwise’s chief investment officer Matt Hougan says the Clarity Act is crucial for converting the current pro-crypto regulatory stance into durable law. Without it, he argues, the industry remains exposed to the changing priorities of future administrations. If the bill stalls, Hougan contends, crypto will have to follow the path of previous disruptive platforms like Uber and Airbnb — becoming so widely used that regulation follows adoption. He gives the industry roughly three years to make stablecoins and tokenized assets essential to the U.S. economy; success would force favorable regulation, while failure could leave crypto dangerously marginal in the next political cycle. That uncertainty, Bitwise says, creates two distinct market trajectories. Passage of a workable Clarity Act would likely trigger a sharp rally as investors price in a guaranteed expansion of blockchain finance. If the bill fails, markets will probably enter a “wait and see” mode, with price upside capped by regulatory skepticism and contingent on demonstrable real-world adoption. Bitwise remains hopeful the administration will uphold its pro-crypto commitments but urges investors to brace for a slower climb if the legislative foundation remains unsettled. Wall Street broker Benchmark takes a slightly less dire view, saying failure to pass the legislation would delay — not derail — crypto’s maturation in the U.S. In that scenario, Benchmark predicts investors would favor bitcoin-centric exposure, firms with strong balance sheets, and cash-flowing infrastructure over regulatory-sensitive areas like exchanges, DeFi and many altcoins. With the committee markup now postponed and political winds shifting, the Clarity Act’s fate may determine whether crypto keeps sprinting forward or settles into a longer, proof-driven march to mainstream adoption. Read more AI-generated news on: undefined/news