According to a ChainCatcher report, cryptocurrency asset management firm Bitwise stated in its latest blog that the crypto industry is now at a critical inflection point as the U.S. Digital Asset Market Clarity Act (CLARITY Act) faces setbacks in Congress. The short-term market trend may shift from a speculative bull run to a more challenging phase of "proving results." Bitwise's Chief Investment Officer, Matt Hougan, emphasized that the CLARITY Act is crucial for solidifying the current relatively friendly regulatory environment into a long-term legal framework. Without clear federal legislation, the crypto industry will remain vulnerable to policy fluctuations in future administrations. Recently, market expectations for the bill's passage have clearly cooled, with the probability on Polymarket dropping from about 80% at the beginning of the year to around 50%. Coinbase CEO Brian Armstrong has also publicly withdrawn his support for the bill, citing concerns that the current draft could harm consumers and stifle competition. Hougan believes that if legislative progress continues to stall, the crypto industry may need to emulate disruptive companies like Uber and Airbnb, which grew in regulatory gray areas. Over the next three years, stablecoins and tokenized assets could become "indispensable" infrastructure in the U.S. economy. If successful, regulators will eventually be forced to follow suit; if not, changes in the political environment could severely impact the industry. In terms of market impact, Bitwise identifies two possible paths: if a viable version of the CLARITY Act is passed, the market may quickly factor in the expectation of expanded blockchain financial certainty, leading to significant price increases. Conversely, if the legislation fails, the market may enter a period of observation, with valuations suppressed by regulatory uncertainty and returns more dependent on real-world adoption. Wall Street firm Benchmark also noted that legislative setbacks will delay rather than end the maturation of the crypto industry. The U.S. market may trade below its potential for a period, with capital favoring Bitcoin-related exposure, strong balance sheets, and infrastructure with cash flows, while remaining cautious about regulatory-sensitive areas such as exchanges, DeFi, and altcoins.
Bitwise: Support for the CLARITY Act Fizzles, Crypto Industry at a Crucial Crossroads
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Summary
Bitwise has warned that the digital asset market is facing a turning point as the CLARITY Act loses support in Congress. The firm's Chief Investment Officer, Matt Hougan, stated that the bill was crucial for maintaining current regulatory stability. Support for the bill has dropped from 80% to 50% on Polymarket, with Coinbase CEO Brian Armstrong stepping back from his previous support. Hougan suggested that the industry may need to push stablecoins and tokenized assets into mainstream adoption if legislative progress stalls. Bitwise outlined two potential scenarios: a market rally if the bill passes, or a downturn if it fails.
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