Bitwise CIO: Crypto industry faces critical period if Clarity Act fails to pass

The cryptocurrency industry faces a critical three-year period to demonstrate widespread adoption if the Clarity Act fails to pass the U.S. Senate, according to Bitwise Chief Investment Officer Matt Hougan.

The Clarity Act received approval from the U.S. House of Representatives in July 2025 with bipartisan support. As of January, the legislation remains under review in the Senate, according to congressional records.

The bill is being considered by the Senate Committee on Banking, Housing, and Urban Affairs, with the Senate Agriculture Committee providing input on provisions related to the Commodity Futures Trading Commission. Senate committees have held hearings and released draft proposals as part of broader market structure legislation, though markups have been delayed as lawmakers debate issues including investor safeguards. Differences between Senate drafts and the House-passed bill are still being reconciled.

Hougan stated that failure to pass the bill would prevent the current regulatory environment from being codified into law, leaving it vulnerable to reversal by a future administration. Without legislative clarity, the industry’s future growth would depend on demonstrable real-world adoption rather than policy expectations, according to Hougan.

The executive said this would place pressure on the industry to demonstrate that use cases such as stablecoins, tokenized securities, and blockchain-based financial infrastructure are being actively adopted at scale. Hougan compared this scenario to the early years of companies like Uber and Airbnb, which operated in regulatory gray areas but eventually became widely used enough that lawmakers adapted regulations to reflect their realities.

Hougan warned that the outcome would not be guaranteed. If crypto is still perceived as operating on the fringes of the financial system after several years, a change in political leadership could result in significant challenges, he stated. In that scenario, investors would wait for clear proof of real-world adoption before rewarding prices, according to Hougan.

By contrast, passage of the Clarity Act in a form the industry supports would likely lead to a sharp market rally as investors anticipate growth in stablecoins, tokenization, and other crypto use cases, Hougan said.

Reports of friction within the industry have emerged as lawmakers continue to debate the bill’s final form. Earlier this month, Citron Research accused Coinbase CEO Brian Armstrong of opposing the act to protect Coinbase’s stablecoin yield business from increased competition.

The allegations surfaced after Coinbase withdrew support for the bill on January 14. The exchange cited concerns over tokenized equities, decentralized finance privacy, stablecoin rewards, and the shifting of regulatory authority toward the Securities and Exchange Commission.

Citron claimed Armstrong feared competition from firms such as Securitize.