Crypto prices rose after the Senate failed to advance the CLARITY Act on September 15. Bitwise CIO Matt Hougan says the setback kept proposed business restrictions from becoming law as regulators moved ahead with narrower actions. But the gains alone do not show that the Senate vote caused the rally.
- Hougan reported gains of 8% for Bitcoin and 7% for Ethereum.
- He pointed to possible beneficiaries in stablecoins, established exchanges, tokenization and revenue-funded token buybacks.
- The regulatory changes are limited: SEC staff guidance is nonbinding, and exemptions come with conditions.
What Hougan says drove the rally
In a September 30 memo, Hougan said crypto markets benefited from two developments: regulators were moving faster than Congress, and restrictions in the final negotiated version of the CLARITY Act did not become law.
“Crypto sacrificed long-term certainty and got better rules, faster, ” Hougan wrote.
That is one interpretation of the market action, not proof that the Senate vote drove prices higher. Hougan reported that Bitcoin gained 8% and Ethereum 7% during his measurement period, but the dates and benchmark for that period are not specified here. Other market forces may have played a role, too.
The difference between legislation and agency action matters. A law can set a statutory framework, while staff guidance and regulatory exemptions are narrower and more vulnerable to shifts in agency leadership or policy. The failed vote left major questions open, even as some firms gained near-term opportunities.
Stablecoin rewards: an opening for exchanges, a concern for banks
Hougan named stablecoin platforms as potential beneficiaries. The separate GENIUS Act, enacted July 18, 2025, bars payment stablecoin issuers from paying interest or yield just for holding, using or retaining their tokens. Hougan reads that restriction as leaving exchanges room to offer rewards funded by third parties.
He said the final negotiated CLARITY text would have gone further, prohibiting platforms from paying stablecoin interest or yield in any form and imposing penalties of up to $5 million per violation. That was his account of a proposed provision. It did not become law.
Hougan named Coinbase as the biggest potential beneficiary of the provision’s failure, arguing that rewards help the exchange attract customers. Banks, though, have warned that these incentives could draw deposits away from their institutions.
On July 14, the American Bankers Association, the Independent Community Bankers of America and 76 state banking associations urged senators to tighten the stablecoin-reward provisions. They warned that incentives tied to balances could shift deposits away from community banks, leaving less money available for mortgages, small businesses and agricultural lending. The groups warned of possible deposit outflows but did not estimate their size.
Established exchanges retain advantages, Hougan argues
Hougan said Coinbase and Kraken could benefit from their state-by-state licensing work and their ability to offer both trading and brokerage services. He argued that a national spot-exchange license proposed under the bill could have made it easier for large traditional financial firms to enter the market. He also said the proposal would have restricted exchanges from combining trading venues and brokerage businesses.
Coinme CEO Neil Bergquist offered a caveat: federal market-structure legislation would not remove separate state licensing requirements. He said the bill mainly dealt with token classification and how authority would be divided between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
The Senate vote was 49-50 on a procedural motion to advance the bill. Seven Democrats who opposed the motion said on September 16 that they would continue bipartisan negotiations. The vote stalled the legislation but did not determine whether the bill could return in another form.
SEC staff guidance addresses token buyback announcements
Hougan also pointed to tokens linked to platforms that use revenue to repurchase supply. As of September 30, he reported gains of 104% for NEAR, 49% for Uniswap, 19% for Pump, 15% for Hyperliquid and 10% for Lighter. The dates and benchmark for these token returns are not specified, so they should not be assumed to cover the same period as the Bitcoin and Ethereum figures. The gains also do not show that buybacks drove the price performance.
On September 25, the SEC Division of Corporation Finance issued FAQs on announcements about token buybacks. Staff added a “no central party” condition on September 28. In the staff’s view, an announcement about a non-security token would not amount to a promise to undertake “essential managerial efforts” if the network is functional and has no central party.
Here, essential managerial efforts means work by an issuer or central party that buyers might expect to generate profits. Staff said that, for an unfinished system, an announcement could imply such a promise if it presents repurchases as a way to produce yield or returns for holders.
These conditions are part of the staff’s analysis, not a blanket declaration that a token is not a security. The SEC said the FAQs express staff views, carry no legal force, do not change existing law and have not been approved or disapproved by the Commission. They offer a regulatory signal, not a binding safe harbor.
Tokenized stocks get a conditional testing route
On September 17, the SEC issued an order allowing qualifying venues to test a defined model for trading eligible tokenized U.S. stocks. It offers conditional relief from the legal definition of an exchange for qualifying venues and from the dealer definition for certain liquidity providers. Broadly, a dealer is a person or firm that buys and sells securities as part of its business. The exemptions expire five years after publication.
The order does not authorize venues to trade any stock in token form. It limits eligible stock symbols and trading volume, requires equivalent shareholder rights and calls for trading pauses that align with the underlying stock’s primary exchange. If an unaffiliated third party tokenizes a stock, the issuer must be notified and given a chance to object.
Hougan named Securitize as a potential beneficiary. The company has tokenization work involving BlackRock, Apollo and KKR, and serves as transfer agent for BlackRock’s BUIDL fund, maintaining its ownership records.
The SEC’s relief should not be confused with every product marketed as a stock token. In coverage dated October 2, Robinhood crypto chief Johann Kerbrat said existing trading activity could approach the framework’s caps. Robinhood’s Stock Tokens are debt securities issued by its Jersey entity, are unavailable to U.S. users and differ from the tokenized shares covered by the SEC order.
Near-term openings, uncertain durability
Hougan warned that an administration taking office in January 2029 could appoint SEC and CFTC leaders who take a tougher approach. Staff guidance and conditional exemptions can change, so the developments he highlighted do not provide lasting legal certainty.
He also argued that more blockchain activity among major financial institutions could make a reversal less likely. That could raise the political and commercial cost of changing course, but it is no guarantee. Institutional adoption can bring more investment and integration, along with more lobbying and regulatory scrutiny.
Key questions and answers
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Why did crypto rise after the Senate vote?
Hougan attributed the gains to faster agency action and proposed restrictions failing to become law. That is his explanation, not proof that the vote caused the rally.
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Did the SEC establish binding rules for token buybacks?
No. The FAQs state SEC staff views and have no legal force. The conditions they describe do not amount to a general finding that a token falls outside securities law.
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Can any venue now trade tokenized U.S. stocks?
No. The SEC order offers conditional, time-limited relief for a defined trading model, subject to eligibility rules, caps and other requirements.
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Could stablecoin rewards affect community banks?
Banking groups warned that incentives tied to balances could draw deposits away from community banks, but did not estimate the potential outflows.
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Has the CLARITY Act been permanently shelved?
The Senate failed to advance it, but seven Democrats pledged to continue negotiations. Its future remains unresolved.
