With the CLARITY Act stalled in Senate and Polymarket odds at 23%, Bitwise’s Matt Hougan says SEC-CFTC guidance and industry momentum make legislative failure survivable.
Crypto Regulation News
The US Senate faced an Aug. 5 deadline to advance the CLARITY Act before its summer recess, and few observers expected it to clear. Prediction market Polymarket put the odds of the bill being signed into law in 2026 at 23% as of early August, down from 82% in February. Galaxy Research revised its own estimate to 30% in July.
Sources speaking to Punchbowl News said Senate Democrats plan to block cloture on the bill unless the White House shows progress on a bipartisan ethics deal and unless the legislation addresses illicit finance provisions and stablecoin yield rules. NYDIG global head of research Greg Cipolaro assessed the situation plainly on July 24, writing that Republicans had produced a substantially more complete bill, but "not yet one with a credible path to 60 votes."
What Happens if the Bill Stalls
Bitwise Chief Investment Officer Matt Hougan addressed the outlook directly in a blog post published Aug. 5, calling a failed vote this week the beginning of a "walking dead" state for the bill rather than its end. He said a lame-duck omnibus package in December, or a return to the issue in September, could still give the CLARITY Act a path forward before the year is out.
If the bill does not pass in 2026, Hougan said the industry would operate under the joint interpretation issued by the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) in March. That document classifies Bitcoin (BTC) and other digital assets as commodities and supersedes the SEC's 2019 staff guidance. SEC Chair Paul Atkins said his agency is "ready, willing, and able to come out with rules that address the same issues as CLARITY and other aspects of the crypto market."
Related Article: Bitwise Pins Next Crypto Bull Market on Hyperliquid, Robinhood
Regulatory Guidance Has Limits Legislation Does Not
Atkins himself acknowledged in March that agency-level guidance is not a permanent fix. Rules issued by the SEC and CFTC can be challenged in court or reversed by a future administration, a vulnerability that formal legislation would remove. WisdomTree chief legal officer Ryan Louvar made the same point at a July congressional hearing, arguing that without a legislative framework, market participants have no reliable way to determine in advance which agency's rules govern their activity.
Hougan acknowledged these limitations but argued that the industry's existing momentum outweighs the near-term regulatory uncertainty. He estimated that even without new legislation, the industry has roughly two and a half years to operate and grow before a potential change in administration could shift the SEC's direction. "Washington is always late to major technology shifts, and it has rarely mattered as much as people feared," he wrote, adding that crypto's role in global finance is now durable enough that no single legislative outcome will change its trajectory.
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