The Clarity Act’s Failure Is a Speed Bump, Not a Roadblock

The crypto bull market doesn’t need Washington’s permission. Here’s the data that proves it.

The Clarity Act failed yesterday. The bill needed 60 votes to advance in the Senate and only got 49. Every Democratic senator voted against the bill, as did a few Republicans.

That’s a shame. The Clarity Act was a good bill. It would have strengthened investor protections and provided crypto with rules that would outlast this administration.

The obvious question now is whether Clarity’s failure will derail the crypto bull market that began in early July.

Back in January, I called the Clarity Act the “Punxsutawney Phil” of crypto and predicted we would get six more weeks of winter if it failed. That would mean we’re in for volatile markets right up to the midterms.

But I no longer think that’s the most likely path. Instead, I suspect Clarity’s failure may matter far less than today’s headlines suggest.

Clarity of Conviction

The thing that has me second-guessing is this chart.

Odds of Clarity Act Passing vs. Bitcoin’s Price

Source: Bitwise Asset Management with data from Polymarket and CoinGecko. Data from July 1 to September 15, 2026.

The crypto bull market we’re talking about began on July 1 when bitcoin bottomed at $57,950. It then ramped through September 4, when bitcoin peaked above $80,000. Over the same time, the Polymarket odds of Clarity becoming law this year tumbled from 39% to 18%. If the bull market depended on Clarity’s passage, you would have expected falling odds to mean falling prices. We got the opposite.

One of the reasons is that Wall Street hasn’t been waiting for Clarity before jumping into crypto. Over the past quarter, we’ve seen Robinhood launch its own blockchain, Morgan Stanley launch a Solana ETF, and DTCC settle its first batch of tokenized stock trades. These firms (and others) took comfort in the fact that we have an extraordinarily pro-crypto SEC and CFTC in place until 2029. They didn’t need the Clarity Act, because they already had clarity of conviction.

That is the reality that will sink in for investors over the next few days. Crypto has been in a “heads we win big; tails we still win” scenario on regulation. Until a new administration takes over in Washington, the SEC and CFTC will have free rein to set the agenda for crypto. SEC Chair Paul Atkins told CNBC in July that the agency is “ready, willing, and able to come out with rules that address the same issues [as] Clarity.” And he wasn’t bluffing: The SEC proposed Regulation Crypto Assets in August. CFTC Chair Mike Selig has said he has CFTC regulations ready and will “move swiftly” if Clarity fails. And only this morning, he doubled down on that statement by saying the agency is “locked in and ready to ship its rules for the new frontier of finance.”

Rules can be reversed by the next administration, and only Congress can give the CFTC real authority over spot markets. But on everything else, Atkins’ and Selig’s rulemaking is likely to be more pro-crypto than the Clarity Act itself. I suspect the current market funk will last right up to the point that Atkins and Selig announce their next proposals on how to regulate the space.

Conclusion

I don’t want to be a Pollyanna about this. It would have been better if Clarity had passed. Crypto would have been the singular consensus trade for investors in Q4 and prices would almost certainly have rocketed higher.

Instead, bitcoin fell about 4% yesterday, and that makes sense (even if some of it was related to worries about rates and oil). The bull market ahead of us has a few more speed bumps. 

But as I see it, the destination is the same, and that’s because the best builders are stubbornly resilient.

Crypto spent its first 17 years without core market legislation. Without Clarity, it has managed to go from a fringe idea to a $2.5 trillion asset class that’s reshaped everything from global payments to capital markets. It has onboarded hundreds of millions of investors and been adopted by the largest financial institutions in the world. 

I suspect we’ll soon look back on Clarity’s failure and see the clear takeaway: Crypto always finds a way to keep building.

Risks and Important Information

No Advice on Investment; Risk of Loss: Prior to making any investment decision, each investor must undertake its own independent examination and investigation, including the merits and risks involved in an investment, and must base its investment decision—including a determination whether the investment would be a suitable investment for the investor—on such examination and investigation.

Crypto assets are digital representations of value that function as a medium of exchange, a unit of account, or a store of value, but they do not have legal tender status. Crypto assets are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not currently backed nor supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional currencies, stocks, or bonds.

Trading in crypto assets comes with significant risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks and risk of losing principal or all of your investment. In addition, crypto asset markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing.

Crypto asset trading requires knowledge of crypto asset markets. In attempting to profit through crypto asset trading, you must compete with traders worldwide. You should have appropriate knowledge and experience before engaging in substantial crypto asset trading. Crypto asset trading can lead to large and immediate financial losses. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price.

The opinions expressed represent an assessment of the market environment at a specific time and are not intended to be a forecast of future events, or a guarantee of future results, and are subject to further discussion, completion and amendment. The information herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice, or investment recommendations. You should consult your accounting, legal, tax or other advisors about the matters discussed herein.