This week, the crypto world put on a truly mind-bending drama.
On Monday, when the (clear bill) didn’t pass, everyone started yelling, "Regulation is doomed" "and a bear market is coming." BTC plummeted from 79,000 to 75,000, and Coinbase and Circle temporarily fell 10%+.
What happened then? Just three days later, BTC rebounded to 81,000, ETH returned to 2,600, the entire DeFi sector surged across the board—UNI jumped nearly 20%, and NEAR directly surged 25%.
Why? Because the market suddenly came to realize—when the bill fails, it doesn’t mean regulation is rolling back. On the contrary, regulation may be moving forward in a faster and more flexible way.
In today’s piece, I want to explain this all the way through. It may be a bit long, but it’s worth reading carefully to the end.
First, figure out clearly: what exactly is the (CLARITY Act)?
Many people only know “bill doesn’t pass = bad news.” But do you truly know what this bill is?
Simply put, (the CLARITY Act) is meant to establish a complete federal crypto regulatory framework in the United States—clarify which tokens fall under the SEC (securities) and which fall under the CFTC (commodities), how exchanges get registered, how users’ assets are protected, and so on.
Sounds great, right? But the problem is, this bill has to go through the legislative process in Congress. It needs 60 votes in the Senate to pass.
In today’s political environment in the U.S., what does “60 votes” mean? Almost nothing big can pass. The two parties have reached the point of “you support me and I oppose you.” Even if everyone agrees on something, it still gets stuck due to political games.
The reason this time got bogged down may sound laughable: it’s not that there are fundamental disagreements about the regulatory framework itself—it’s Trump’s conflicts of interest. Democrats believe the bill didn’t restrict the president’s family from making money in the crypto industry (Trump made about $1.4 billion last year from crypto-related businesses). Republicans don’t want overly strict limitations.
Because of this, that long-awaited regulatory framework bill for the whole industry turned yellow.
So is this an industry failure? No—this is a failure of U.S. politics. The industry’s demand, regulators’ willingness, and even the basic consensus across both parties were there. It’s just been hijacked by political games.
Second, the key point: after the bill turned yellow, what happened?
What’s really interesting is what happened within the 48 hours after the bill failed. I’ll lay it out for you:
First: The SEC issued “Innovation Exemptions,” directly opening tokenized stock trading.
On September 17—that is, the second day after the bill failed—the SEC announced something called “Innovation Exemption.” Platforms that meet the criteria (TSVs) can trade tokenized U.S. stocks on-chain, using the AMM and liquidity pool model, with a 5-year exemption period.
You may not realize how significant this is. Let me translate it for you:
The SEC directly uses its own administrative authority to give tokenized securities the green light
No need for congressional legislation, and no need to wait for a new law. The SEC said it and just did it.
This isn’t some small pilot project—it’s tokenization of the U.S. stock market with a scale of $7.7 trillion.
Companies like Robinhood, Coinbase, and Kraken have had overseas businesses for a while. Now they can return to the U.S. with full legitimacy.
SEC Chair Atkins said it very plainly: “If Congress is blocked, then we’ll use existing authority to move forward.”
Second, the CFTC also acted in parallel.
On the same day, the CFTC submitted its own crypto asset regulatory rules to the White House Office of Management and Budget for review. Same idea—bypassing Congress and pushing forward directly using existing authority.
CFTC Chair Selig previously said: if congressional legislation doesn’t work, we’ll do it ourselves.
Third: S&P Global acquired OpenZeppelin.
What is S&P Global? One of the world’s top three credit rating agencies. What is OpenZeppelin? A leader in smart contract security; its codebase has handled transactions worth over $3.7 trillion.
Traditional finance giants directly acquire blockchain infrastructure companies—what signal is that? It shows that traditional finance isn’t standing by. They’ve already stepped onto the field. They don’t wait until regulation is fully clear; they move to secure the infrastructure first.
If you connect these three things, you’ll understand:
That route in Congress is blocked, but the SEC, the CFTC, S&P Global, Wall Street… everyone kept going. If a big bill can’t be pushed forward, then do small steps, one thing at a time—get it done.
Third, why do I say this might be a good thing?
Let me share a counterintuitive point: pushing regulation forward through administrative actions may be faster and more flexible than doing it through congressional legislation.
Why do you say that?
First: speed.
How long does legislation take in Congress? From introduction to committee review to votes in both chambers to the president’s signature—if everything goes smoothly, about a year and a half; if not, drag on 3 to 5 years, or even stay dead forever.
What about administrative exemptions? The SEC says it, and it’s effective the next day. This “Innovation Exemption” went from bill failure to issuance in just 48 hours.
Second, you can try and make mistakes.
What is legislation? Once it’s written into law, changing it is especially difficult. If the rules are wrong—say, they turn out to be wrong—then you have to go through the legislative process again. It can take years to fix.
Administrative exemptions are different. This time, the SEC provided a 5-year temporary exemption: let it run first to see the effects—if it works, expand it; if not, adjust it. The flexibility is on a completely different level.
Third, it won’t be held hostage by politics.
Why did the (CLARITY Act) get stuck this time? It’s not because there’s something wrong with the regulatory framework itself—it’s because of politics: Trump’s conflicts of interest, the tug-of-war between the two parties, the midterm elections… all sorts of things unrelated to the crypto industry dragged it into a deadlock.
Administrative measures don’t have that problem. The SEC and CFTC are professional regulators. Yes, they’re also influenced by politics, but at least they don’t have to bargain with hundreds of members in both the House and Senate. They don’t have to craft all kinds of bizarre clauses just to win votes.
The Wall Street Journal put it really well: “After the CLARITY Act failed, the SEC and CFTC are using existing rules to fill the regulatory gaps.”
A “blank” doesn’t mean there’s no regulation—it means there’s no single unified rulebook. But the specific rules, the specific innovations, and the specific collaborations have been moving forward.
4. What does this mean for us?
After all this talk about the macro picture, let’s end with something concrete—when the regulatory path changes like this, what does it really mean for ordinary investors and for people in the industry?
1. Stop focusing on the (CLARITY Act)
A lot of people are still waiting for the narrative “bill passes = bull market starts.” I can tell you this narrative is outdated.
The bill has finally passed, but it’s not going to be some shocking piece of good news. The regulatory push that needs to happen was already underway. Even if the bill never passes, the sky won’t fall, because the regulators themselves will keep moving forward.
Industry regulatory certainty no longer depends on a single vote in Congress. Instead, it depends on the step-by-step concrete actions by institutions like the SEC and CFTC.
2. Focus on what’s really happening
Don’t just stare at headline news. Headlines are all about big events like “bill fails” or “rate hike lands,” but what often truly determines the industry’s long-term direction are those less conspicuous pieces of information:
SEC allows on-chain trading of tokenized stocks
S&P Global acquires blockchain security firm
CFTC pushes crypto asset regulatory rules
Traditional financial institutions quietly move to set up RWA and tokenization
These things don’t make the coin price rise in the short term, but they decide where the ceiling of this industry will be in the long run.
3. Regulatory clarity isn’t a single event—it’s a process
A lot of people have a misconception: they think regulatory clarity means that on a certain day, “click”—all rules are set, and then the industry takes off.
That’s not how reality works. Regulatory clarity is a gradual process—today you allow tokenized stocks, tomorrow you issue exchange rules, and the day after that you define stablecoin regulation… One thing after another, and before you know it, the industry’s regulatory framework is built.
When ETFs were approved in 2024, many people thought, “Regulatory clarity is here—bull market incoming.” What happened? A bull market did come—but not because of a single thing. It was because of ETFs, institutional participation, infrastructure improvements, and regulatory clarity gradually taking shape… once many things accumulate to a certain level, it naturally erupts.
Finally
Back to the original question: Why did the market rise when the bill failed?
Because the market gradually started to react—this isn’t regulatory rollback; it’s a switch in the regulatory path. From “waiting for Congress to legislate” to “regulators just do it themselves,” from “pursuing a one-shot big framework” to “small steps, fast execution,” pushing forward in an incremental way.
In the short term, this means there’s one less emotional catalyst—“a bill passing.” The market likely won’t suddenly surge just because of one piece of news.
But in the long run, this kind of gradual regulatory path—doing it while adjusting along the way—may be healthier and more sustainable. It won’t let you get rich overnight, but it will make the industry’s foundation more and more solid.
Once you’ve been trading for a while, you’ll realize that the truly big bull run is never caused by some single piece of news. It’s the result of many things quietly accumulating to a certain point—water reaching the right channel.
Don’t rush,
What’s supposed to come will come,
It’s just that the way it happens may be different from what you think.
Tonight at 9 PM, let’s chat in the room: “After the regulatory path changes, where are the industry’s opportunities next?” We’ll go deep—interested folks, come join.