On Tuesday afternoon’s vote in Washington, the crypto industry waited for an entire year, and the CLARITY market structure bill—along with its debate procedure—didn’t even make it onto the agenda. This Congress basically has no chance. The awkward part is what happened in the charts over the following days: the bill died, yet crypto prices bounced back instead. What exactly did the industry lose when the bill failed? And is the market not caring because it has seen through it—or because it missed something? It’s worth going through these together.
A procedural vote required 60 votes, and this time it fell far short. All Democrats voted “no,” and several Republicans—including Collins, Hawley, Moran, and others—also defected. The most striking were Democrats like Gillibrand, Warner, Booker, and Gallego, who had spent months scrubbing the bill’s language with the Republicans; in the end, not a single one of them cast a “yes” vote.
Where the talks broke down has little to do with how the SEC and CFTC would split responsibilities. What truly got stuck were the moral/ethics clauses. Democrats wanted the provisions banning officials and their family members from profiting from the crypto industry to be written broader and tougher, aimed squarely at the president’s family’s crypto businesses. Republicans revised the wording in a version over the weekend, but Democrats still wouldn’t accept it. Senate Majority Leader Thune later said the final proposal already addressed the other side’s concerns, and that the other side walked away on its own.
Another shadow thread is stablecoin yield. Hawley and Moran sided with community banks, worrying that if stablecoins were allowed to pay rewards similar to interest, deposits would leave small-town banks, making it harder for local farms and small businesses to borrow. Crypto firms say it’s basically the same as credit card cashback, but the banking industry doesn’t buy that.
Now look at the prices. On the day of the vote, BTC’s daily candle closed down more than three percentage points; ETH fell even harder, nearing five points. If you only look at that one day, you’d think the market cared. The turning point came over the next two days. On Wednesday, the Fed raised rates by 25 basis points—the first time in three years. By Friday, U.S. Treasury yields and oil prices both retreated from their highs, and fears of inflation after the rate hike eased, sending risk assets back up. As of this morning, BTC is back above $81,000 and ETH is back above $2,600—already not only recouped the losses from the vote day but also gained some extra.
Another thing pushing prices happened on Thursday. SEC Chair Atkins released an innovative exemption allowing tokenized U.S. stocks to be traded in AMM pools on-chain, with a five-year term. It requires tokens to have the same rights to dividends and voting as the underlying stock. In her statement, Atkins directly mentioned that Congress failed to move forward on CLARITY. The SEC, she said, is moving ahead using existing authority first, while acknowledging this is only a transitional measure—formal rules must follow.
Friday’s leaders were Layer 2 and DeFi—$ARB is the most representative. Its momentum started well before the vote, and the current price is already up to about three times what it was a month ago. The driver is Robinhood Chain. This chain is built on Arbitrum technology, and according to its expansion plan, it will share 10% of net revenue with Arbitrum. Robinhood built this chain to focus on tokenized stocks; with the SEC exemption coming out, that theme got another push forward.
In the original text of the exemption, there’s a requirement: trading venues must set admission standards and only allow certain participants to trade. The on-chain market the SEC opened now has gatekeeping: what’s allowed in are licensed institutions and users who have passed identity verification, and the pools also run under a permission model. A few of the coins that surged the most this week are telling exactly the story of licensed institutions getting on-chain.
After the bill died, what was lost was half the picture. CLARITY left many provisions for open DeFi. Software that doesn’t touch user funds is separately protected: verification of transactions, publishing code, building wallets, running front-ends—all are included. It doesn’t regulate developers who don’t control the chain, nor does it treat things as if they were remittance businesses. Native tokens like ETH, after passing maturity tests, can be categorized as “digital commodities” under the CFTC. These provisions have to be written into law to count. Asset classification and developer protection are things the SEC can’t provide with exemptions and guidance alone; even if it does now, a future administration can change it back.
Coinbase CEO Brian Armstrong said the bill’s failure is disappointing, but fortunately there’s another path: going through the SEC and the CFTC. The worry from Enso co-founder Connor Howe is almost the opposite: a new chair wouldn’t need a Senate confirmation vote to rewrite an institutional rule. Strategy was even more blunt, saying BTC’s regulatory status in the U.S. has been clear for years.
I partly agree with all three perspectives. The three sides are really talking about different assets. On BTC, Strategy is right. Coinbase and Robinhood, like licensed companies, are covered—Armstrong is also right: the administrative route is enough, and arguably faster. But once you get to layer $ETH , things get complicated. ETH itself is most likely treated as a commodity; the people affected are the open protocols running on ETH and the developers who write code for them. They were waiting for a law to carve out a safe, unified zone—now they can only hope the regulator’s attitude stays consistent. Howe’s concern lands here most accurately.
So my judgment is: this week’s price action doesn’t care, and that’s correct in the short term. The market is calming after the rate hike in macro terms, and the SEC’s ability to quickly push exemptions/approvals is also real—both are true. But the market is likely underestimating the impact of legislative failure on open DeFi. For now, regulatory benefits are concentrated on the side with gatekeeping, and that side’s rules themselves are temporary. After mid-year elections, if the political landscape and regulatory approach change, exemptions can be given—and taken back.
If the Senate were to retake the vote before this year’s recess and pass it, or if the SEC and CFTC include non-custodial developers in protection within formal rules, then the cost of legislative failure would be smaller than I estimate. Conversely, if over the next few months we only see permissioned pools and licensed channels, and open DeFi keeps getting no further movement, then the risk will keep hanging there.
Next, you can look at the SEC and CFTC’s follow-up rules to see whether they explicitly mention developers who don’t have custody of users’ funds. If they do, the gap left by #CLARITY法案 can be filled. If it’s only permissioned pools, then this week’s rally will only be on the licensed-institution side.
A procedural vote required 60 votes, and this time it fell far short. All Democrats voted “no,” and several Republicans—including Collins, Hawley, Moran, and others—also defected. The most striking were Democrats like Gillibrand, Warner, Booker, and Gallego, who had spent months scrubbing the bill’s language with the Republicans; in the end, not a single one of them cast a “yes” vote.
Where the talks broke down has little to do with how the SEC and CFTC would split responsibilities. What truly got stuck were the moral/ethics clauses. Democrats wanted the provisions banning officials and their family members from profiting from the crypto industry to be written broader and tougher, aimed squarely at the president’s family’s crypto businesses. Republicans revised the wording in a version over the weekend, but Democrats still wouldn’t accept it. Senate Majority Leader Thune later said the final proposal already addressed the other side’s concerns, and that the other side walked away on its own.
Another shadow thread is stablecoin yield. Hawley and Moran sided with community banks, worrying that if stablecoins were allowed to pay rewards similar to interest, deposits would leave small-town banks, making it harder for local farms and small businesses to borrow. Crypto firms say it’s basically the same as credit card cashback, but the banking industry doesn’t buy that.
Now look at the prices. On the day of the vote, BTC’s daily candle closed down more than three percentage points; ETH fell even harder, nearing five points. If you only look at that one day, you’d think the market cared. The turning point came over the next two days. On Wednesday, the Fed raised rates by 25 basis points—the first time in three years. By Friday, U.S. Treasury yields and oil prices both retreated from their highs, and fears of inflation after the rate hike eased, sending risk assets back up. As of this morning, BTC is back above $81,000 and ETH is back above $2,600—already not only recouped the losses from the vote day but also gained some extra.
Another thing pushing prices happened on Thursday. SEC Chair Atkins released an innovative exemption allowing tokenized U.S. stocks to be traded in AMM pools on-chain, with a five-year term. It requires tokens to have the same rights to dividends and voting as the underlying stock. In her statement, Atkins directly mentioned that Congress failed to move forward on CLARITY. The SEC, she said, is moving ahead using existing authority first, while acknowledging this is only a transitional measure—formal rules must follow.
Friday’s leaders were Layer 2 and DeFi—$ARB is the most representative. Its momentum started well before the vote, and the current price is already up to about three times what it was a month ago. The driver is Robinhood Chain. This chain is built on Arbitrum technology, and according to its expansion plan, it will share 10% of net revenue with Arbitrum. Robinhood built this chain to focus on tokenized stocks; with the SEC exemption coming out, that theme got another push forward.
In the original text of the exemption, there’s a requirement: trading venues must set admission standards and only allow certain participants to trade. The on-chain market the SEC opened now has gatekeeping: what’s allowed in are licensed institutions and users who have passed identity verification, and the pools also run under a permission model. A few of the coins that surged the most this week are telling exactly the story of licensed institutions getting on-chain.
After the bill died, what was lost was half the picture. CLARITY left many provisions for open DeFi. Software that doesn’t touch user funds is separately protected: verification of transactions, publishing code, building wallets, running front-ends—all are included. It doesn’t regulate developers who don’t control the chain, nor does it treat things as if they were remittance businesses. Native tokens like ETH, after passing maturity tests, can be categorized as “digital commodities” under the CFTC. These provisions have to be written into law to count. Asset classification and developer protection are things the SEC can’t provide with exemptions and guidance alone; even if it does now, a future administration can change it back.
Coinbase CEO Brian Armstrong said the bill’s failure is disappointing, but fortunately there’s another path: going through the SEC and the CFTC. The worry from Enso co-founder Connor Howe is almost the opposite: a new chair wouldn’t need a Senate confirmation vote to rewrite an institutional rule. Strategy was even more blunt, saying BTC’s regulatory status in the U.S. has been clear for years.
I partly agree with all three perspectives. The three sides are really talking about different assets. On BTC, Strategy is right. Coinbase and Robinhood, like licensed companies, are covered—Armstrong is also right: the administrative route is enough, and arguably faster. But once you get to layer $ETH , things get complicated. ETH itself is most likely treated as a commodity; the people affected are the open protocols running on ETH and the developers who write code for them. They were waiting for a law to carve out a safe, unified zone—now they can only hope the regulator’s attitude stays consistent. Howe’s concern lands here most accurately.
So my judgment is: this week’s price action doesn’t care, and that’s correct in the short term. The market is calming after the rate hike in macro terms, and the SEC’s ability to quickly push exemptions/approvals is also real—both are true. But the market is likely underestimating the impact of legislative failure on open DeFi. For now, regulatory benefits are concentrated on the side with gatekeeping, and that side’s rules themselves are temporary. After mid-year elections, if the political landscape and regulatory approach change, exemptions can be given—and taken back.
If the Senate were to retake the vote before this year’s recess and pass it, or if the SEC and CFTC include non-custodial developers in protection within formal rules, then the cost of legislative failure would be smaller than I estimate. Conversely, if over the next few months we only see permissioned pools and licensed channels, and open DeFi keeps getting no further movement, then the risk will keep hanging there.
Next, you can look at the SEC and CFTC’s follow-up rules to see whether they explicitly mention developers who don’t have custody of users’ funds. If they do, the gap left by #CLARITY法案 can be filled. If it’s only permissioned pools, then this week’s rally will only be on the licensed-institution side.