Crypto Rallies as CLARITY Act Failure Opens Door to Faster SEC Rules

Crypto markets rallied after the U.S. Senate failed to advance the CLARITY Act, with investors appearing to embrace a faster regulatory path led by federal agencies rather than Congress.

Bitcoin gained roughly 8% over two weeks, while Ether rose about 7%. NEAR surged nearly 104% and Uniswap jumped around 49%. Bitwise Chief Investment Officer Matt Hougan said the rally reflected several potential benefits created by the legislation’s collapse.

In a Sept. 30 client memo, Hougan argued that crypto had traded long-term legislative certainty for more favorable rules that could arrive sooner.

The Senate voted 49–50 on cloture on Sept. 15, leaving the CLARITY Act short of the votes required to advance. One major dispute involved stablecoin rewards. Banks had sought restrictions preventing crypto platforms from offering interest or rewards on stablecoin balances.

With the bill stalled, the 2025 GENIUS Act remains the key framework. It prevents stablecoin issuers from directly paying interest but does not impose the same restriction on intermediaries. Hougan said this could allow exchanges to continue offering stablecoin rewards, potentially benefiting platforms such as Coinbase.

Established crypto exchanges could also benefit because the CLARITY Act would have introduced a national spot-exchange license, potentially making it easier for new competitors to enter the U.S. market.

Meanwhile, the SEC and CFTC have moved forward with crypto regulation independently. Two days after the Senate vote, the SEC issued a five-year innovation exemption allowing tokenized U.S.-listed stocks to trade through permissioned automated market makers and liquidity pools.

Regulatory guidance around token buybacks has also supported decentralized finance tokens. Hougan highlighted NEAR, Uniswap, Hyperliquid and Pump among the strongest performers following the vote.

However, Hougan cautioned that agency guidance does not carry the permanence of federal legislation and could be reversed by a future administration. Still, he argued that the current regulatory environment could give major financial firms enough time to expand their blockchain operations.

With the CLARITY Act potentially returning after the midterm elections, crypto markets are currently treating the agency-led regulatory framework as the near-term baseline.