Bitwise: SEC Rulemaking Could Let Crypto Grow Even if CLARITY Act Stalls

Bitwise: Crypto can keep growing even if CLARITY Act stalls Bitwise Chief Investment Officer Matt Hougan said Aug. 4 that the crypto industry can continue expanding even if the U.S. Senate fails to advance the CLARITY Act before its August recess. In a client memo, Hougan argued that Securities and Exchange Commission rulemaking — combined with continuing adoption of digital assets by traditional financial firms — could provide an alternate path for industry progress. He emphasized this is a forward-looking view, not a guarantee of regulatory outcomes. Where the CLARITY Act stands - The Senate’s floor schedule for Aug. 4 did not include H.R. 3633 (the updated CLARITY Act), and no cloture filing had been announced by the end of the day. Senate leaders faced a practical deadline: filings to preserve a possible Friday procedural vote needed to be made by Aug. 5. Under Senate Rule XXII, a cloture motion requires 16 senators’ signatures and, if invoked, normally needs 60 votes to end debate. - The bill previously cleared the Senate Banking Committee on May 14 by a 15–9 vote. Senator Cynthia Lummis later released a merged 616‑page proposal combining work from the Banking and Agriculture committees; the revised bill remains on the Senate calendar but has not received a full‑chamber vote. - Government funding measures and nominations had filled the available floor time, meaning omission from the schedule doesn’t legally kill the bill but makes timely debate, amendment and passage unlikely before lawmakers leave for August recess. If leaders don’t act, the bill could be pushed into an already crowded fall calendar or be attached to a year‑end package — a “walking dead” scenario, Hougan warned. Why Bitwise thinks crypto can still progress Hougan pointed to recent comments from SEC Chair Paul Atkins, who said the agency was “ready, willing, and able” to address several areas the CLARITY Act covers. Hougan suggested that agency rules adopted under Atkins’ approach — including work under Project Crypto on token classifications, capital formation and market rules — might initially be more favorable to innovation than the compromises needed to secure bipartisan congressional support, and could even “accelerate” industry growth. He also noted the limits of that path: agency rulemaking cannot achieve everything a statute could, and rules are more vulnerable to reversal by a future commission than federal law. What the CLARITY Act would change — and what rules alone cannot The CLARITY Act seeks to divide jurisdiction over digital assets between the SEC and the Commodity Futures Trading Commission (CFTC), and the updated summary covers token disclosures, digital commodity exchanges, customer property protections, decentralized finance, stablecoin rewards, and anti‑money‑laundering provisions. While the SEC can adopt rules for securities, registered intermediaries and token offerings under its existing authority, it cannot unilaterally grant the CFTC national authority over digital commodity spot markets — a statutory change only Congress can make. That division means SEC rulemaking could address important pieces of the regulatory puzzle but would not provide the comprehensive framework a law could create. Political and stakeholder disagreements slowing progress Several policy disputes complicate getting to a 60‑vote threshold in the Senate: - Seven Democratic senators (Catherine Cortez Masto, Angela Alsobrooks, Cory Booker, Ruben Gallego, John Hickenlooper, Mark Warner and Raphael Warnock) said the merged Republican text “falls short,” asking for stronger protections around elected‑official conduct, consumer protections, illicit finance, conflicts of interest and market integrity. - The merged bill includes an ethics section that would bar covered officials and spouses from issuing or sponsoring digital assets for compensation while in office and would require additional disclosures, but Democrats have not accepted these measures as sufficient. - Banking groups want tighter limits on rewards tied to payment stablecoin balances. The current text bans interest paid solely for holding stablecoins but permits certain activity‑ and loyalty‑based rewards — language banks say could still look too much like deposit interest. - Twelve senators raised concerns about prediction markets and asked that CFTC‑registered platforms be barred from listing contracts resembling sports wagers or casino games; they also sought stronger protections for state authority, tribal sovereignty and tribal gaming compacts. These unresolved issues — touching CFTC powers, banking law, political ethics and tribal gaming — show why procedural votes and bipartisan buy‑in matter, and why SEC action can’t fully substitute for statute. Market signals and next steps Polymarket traders currently price the CLARITY Act’s chance of becoming law by Dec. 31 at about 23% (down from 27% when Hougan published his memo), with roughly $3.9 million in volume on the market. A cloture filing would be the next concrete sign of movement; without one, ordinary Senate procedure leaves almost no route to a pre‑recess final vote. Even if Congress pauses, narrower SEC rules could still land and reshape parts of the market — but the longer‑term question of which federal agency holds ultimate oversight over different parts of the digital‑asset ecosystem would remain unsettled.