This week the largest piece of U.S. crypto legislation, the Clarity Act, failed a Senate procedural vote 49-50, well short of the 60 it needed. Every Democrat voted no over ethics provisions, and four Republicans joined them. The bill would have split crypto oversight between the SEC and CFTC and clarified which tokens count as securities. The Senate has about 10 working days left before it breaks for the election, and the lame duck after it is short and crowded. It is probably done for this Congress.
Investors in crypto public companies don’t seem to care. Coinbase fell 10% on Tuesday when the vote failed, has since come all the way back and is up about 11% for the week. The average company across our index is up 8%.
So what’s happening?
Part of it is that few expected the bill to pass. Prediction markets had it near 30% on Monday and around 15% by Tuesday morning, hours before the vote. Tuesday looks more like Monday’s 9% run-up getting unwound than the market rethinking these businesses.
Part of it is that the regulators are moving without Congress. By Thursday the SEC had issued a five-year exemption for tokenized stocks to trade on-chain and the CFTC had filed its first crypto market rulemaking with the White House. The SEC piece is live today. The CFTC’s is a pre-rule, which means a binding rule is probably a 2027 story.
And a large part of it is still Bitcoin, which went from $76K on Tuesday to $81K on Friday, with Wednesday’s Fed hike passing without much drama. As we said last month, these stocks still trade as leveraged Bitcoin proxies.
Our take is that the market is treating Clarity as a delay, not a loss, and giving the agencies credit for filling the gap. Fair enough for now. The catch is that the SEC’s relief is temporary by construction, it runs five years and the Chairman called it a bridge to real rulemaking. And the CFTC half hasn’t landed at all yet. The market is pricing two fixes when it has one.
