Summary

• Hougan argues crypto benefited from avoiding Clarity Act restrictions, as Bitcoin and Ether gained despite the failed Senate advancement vote.
• Stablecoin rewards remained available while established exchanges avoided proposed changes affecting competition and combined exchange and brokerage business operating models.
• SEC measures supported tokenization and clarified token buybacks, although Hougan warned future administrations could reverse policies without permanent congressional guarantees.

 

Bitwise Chief Investment Officer Matt Hougan attributes crypto’s rally to avoided restrictions and favorable regulatory measures despite the Clarity Act’s setback. According to Hougan, the stalled legislation spared exchanges from limits on stablecoin rewards while regulators introduced measures supporting tokenization.

In his Wednesday memo, Hougan argued that the bill’s failure preserved business opportunities that its proposed restrictions could have limited. Although legislation promised clearer federal rules, he outlined several compromises that could have reduced those benefits for crypto businesses.

Senators rejected a motion to advance the Clarity Act on September 15, with 49 voting in favor and 50 against. However, the market strengthened despite expectations that the legislative disappointment would erase gains recorded during the preceding month.

Bitcoin climbed nearly 11%, while ether gained approximately 12%, and several smaller cryptocurrencies recorded larger increases during the same period. Meanwhile, total crypto market capitalization reached roughly $2.95 trillion, rising from approximately $2.65 trillion on September 15.

Hougan identified stablecoin rewards as a major example of how the stalled bill could benefit companies operating under existing rules. He noted that the final proposal would have barred platforms from paying customers interest or yields on their stablecoin balances.

Consequently, exchanges such as Coinbase retained the ability to offer those rewards under the existing GENIUS Act framework, Hougan explained. His analysis presented this outcome as a commercial benefit, despite the absence of broader certainty from federal market structure legislation.

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Stablecoin Rewards and SEC Measures Shape Hougan’s Explanation for Crypto Gains

Additionally, Hougan argued that established exchanges avoided changes that could have increased competition and restricted how they organize their services. The proposed national licensing path could have helped new competitors enter the market, challenging businesses already serving American crypto customers.

Moreover, the legislation would have limited companies combining exchange and brokerage services, creating another potential constraint for existing trading platforms. These provisions helped explain why Hougan viewed the Senate setback as a mixed outcome rather than an exclusively negative development.

Beyond exchange operations, he highlighted regulatory measures that offered opportunities for tokenization without waiting for Congress to approve the bill. Days following the vote, the SEC introduced a five-year innovation exemption allowing limited trading of tokenized American stocks through onchain platforms.

Subsequently, SEC staff updated guidance addressing token buybacks, clarifying that certain announcements would not automatically establish an investment contract. Specifically, announcing a buyback for an already functioning crypto network would not itself make a token sale an investment contract.

However, Hougan warned that regulatory measures lack the permanence of congressional legislation, leaving companies exposed to a possible policy reversal. A future administration could change direction, making the durability of these benefits an unresolved issue despite the market’s gains.

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The post Bitwise CIO Explains Why Crypto Rallied Despite Clarity Act Setback appeared first on 36Crypto.