Bitwise Chief Investment Officer Matt Hougan said failure to advance the CLARITY Act this week would not necessarily kill the legislation, but it would likely extend uncertainty for the crypto market.
Hougan, writing in a commentary carried in Chinese by MarsBit, said Congress should pass the CLARITY Act. He described the bill as imperfect but still solid, and said it would support the U.S. economy, protect investors, strengthen ethical safeguards, and help the country compete in the era of on-chain finance.
The bill has been moving through Congress since May 2025, according to Hougan. He traced its roots back to the FIT21 bill, which passed the U.S. House of Representatives in May 2024, 804 days ago.
This week is seen as a key deadline before the Senate recess
Hougan said many people, himself included, have viewed this week as a decisive stretch for the CLARITY Act. The reason is procedural. The U.S. Senate is set to begin its August recess on Friday, Aug. 7, and is not due back until Sept. 14.
Under Senate rules, senators would need to file for cloture by Wednesday, Aug. 5, if they want a vote before the recess. That timing has made this week a focal point for the bill’s prospects.
Hougan said the prevailing view is that if Congress does not vote on the bill before the August break, it is likely to lose momentum as lawmakers turn their attention to the November election. He cited Polymarket data showing the probability of the bill passing in 2026 at 27%, down from 82% in February this year.
A failed push this week would not mean the bill is dead
Hougan wrote that the best outcome for the industry would still be straightforward passage of the CLARITY Act. If that happens, he said, he expects a new crypto bull market. But he also said the odds of that result appear low, making it more useful to examine what happens if the bill does not get through.
His first point is that the legislation would not truly disappear. If the bill fails this week, he expects it to enter what he called a "zombie state" — not repealed, not finished, but difficult to move forward.
As the August deadline approaches, Hougan said there have already been rumors that the bill could be pushed to September. Other voices have suggested December, during the lame-duck session after Congress returns. He noted that Congress often folds multiple measures into a year-end omnibus package, forcing lawmakers to vote on a broad bundle containing provisions they both support and oppose. Some market participants are hoping CLARITY could make it through that way.
He said that after Wednesday’s deadline passes, more reports and discussion are likely on whether the bill could still be slipped through in the fall or winter.
Institutional investors may stay on the sidelines longer
Hougan said the downside of this unresolved setup is that it keeps many professional institutional investors in wait-and-see mode.
In his view, those investors do not want to allocate capital to crypto assets only to see the bill fail and the market fall afterward. They would rather wait until the outlook is clearer before making a move.
He added that if the bill fails this week, the more favorable version of that outcome would be a sharper drop in Polymarket’s implied odds of passage, to somewhere in the teens. If that happens, he said, the market could see a short bout of volatility and then be set up for a rebound in the fall.
Crypto would still move ahead even without CLARITY
Hougan’s broader argument is that the industry itself would not suffer a fatal setback if the CLARITY Act does not become law.
He said crypto would find another path. To make that case, he pointed to comments from U.S. Securities and Exchange Commission Chair Paul Atkins in a CNBC interview last week. According to Hougan, Atkins said the SEC is "ready, willing and able to provide regulatory rules to address the same issues as CLARITY."
Hougan said that route carries trade-offs. In the near term, rules issued by an SEC led by Atkins would probably be friendlier to crypto and innovation than a bill shaped through congressional bargaining between the two parties. They could even act as a tailwind for the sector.
The risk, he said, is that a future administration could appoint an SEC chair who is less supportive of crypto and unwind those rules.
He says even a future reversal would not stop the sector’s direction
Even with that risk, Hougan said he does not think a future SEC chair would be able to reverse the broader advance of crypto. The industry is still moving quickly, he wrote, and financial activity is shifting on-chain.
He cited several examples: BlackRock’s most profitable ETF is its Bitcoin ETF; Nasdaq and JPMorgan are pushing ahead with tokenization; Visa, Mastercard, Stripe, and Coinbase are working together on stablecoin platforms; and Robinhood has launched its own blockchain that can connect with DeFi apps including Uniswap and Morpho.
He also said crypto firms are entering the U.S. federal banking system. The Office of the Comptroller of the Currency has granted trust charters to Circle, Ripple, Paxos, and a growing number of other companies. Outside the U.S., he said jurisdictions including the European Union, Japan, and Russia are racing to put crypto-friendly laws in place.
"The genie is out of the bottle"
Hougan argued that if CLARITY fails and regulation instead comes through SEC rulemaking, the industry would still have at least a two-and-a-half-year window to develop before a new administration could potentially install a new SEC chair.
By that point, he wrote, no SEC chair would be able to put the genie back in the bottle.
To support that view, Hougan turned to the history of internet regulation in the U.S. In 1994, the House passed a sweeping telecom reform bill by a 423-4 vote, but the measure stalled in the Senate and never received a full floor vote. He said that sounds familiar.
But the internet did not wait. Over the next two years, Netscape launched and went public, Amazon and eBay were founded, and the number of websites grew exponentially. Congress eventually caught up. In 1996, the Telecommunications Act passed the Senate 91-5 and became a foundation for decades of industry growth. Looking back, Hougan said, a two-year policy delay did not truly slow the sector down.
Congress may lag, but Hougan says crypto is already part of finance
Hougan closed by saying Washington often reacts slowly to major technology shifts. In his view, it is absurd that lawmakers have not yet delivered a bill that could both protect investors and encourage innovation.
Still, he said that delay should not be used to judge whether crypto assets deserve a place in global financial infrastructure. Crypto has already become part of the financial system, he wrote. The industry has built enough momentum that whatever Congress does in the coming days, it will keep reshaping finance for decades.