Emre Yumlu 
One of the most consequential regulatory efforts for the future of crypto markets in the United States is facing growing uncertainty. The Clarity Act, designed to define market structure and regulatory authority for digital assets, remains stalled in the U.S. Senate. According to Bitwise Chief Investment Officer Matt Hougan, failure to pass the legislation could push the U.S. crypto sector into a prolonged period of self-validation lasting up to three years.
Why the Clarity Act Matters
The Clarity Act passed the U.S. House of Representatives in July 2025 with bipartisan backing. However, as of January 2026, the bill is still under review in the Senate. The Senate Banking, Housing, and Urban Affairs Committee is leading the process, while the Senate Agriculture Committee is responsible for provisions related to the Commodity Futures Trading Commission (CFTC).
Although multiple hearings have taken place and draft frameworks around crypto market structure have been released, progress has been slow. Disagreements over investor protections, regulatory jurisdiction, and the division of authority between agencies have prevented alignment between the Senate’s drafts and the version approved by the House.
The Risk of a “Show Me” Era
Hougan warns that without the Clarity Act, today’s relatively constructive regulatory environment lacks durability. A future change in political leadership could easily reverse the current stance toward crypto.
In this scenario, the industry would enter what Hougan describes as a “show me” period—a phase where crypto can no longer rely on regulatory optimism and must instead prove its value through real-world adoption. Stablecoins, tokenized securities, and blockchain-based financial infrastructure would be expected to demonstrate tangible, large-scale utility to justify continued investor confidence.
Lessons from Uber and Airbnb
Hougan draws parallels to the early years of companies like Uber and Airbnb, which operated for years in regulatory gray zones. Their widespread adoption eventually forced policymakers to adapt. Crypto, he argues, may have to follow a similar path if legislative clarity fails.
However, the outcome is far from guaranteed. If crypto remains perceived as peripheral to the financial system after several years, a shift in political sentiment could result in significantly tighter restrictions. In such an environment, markets are unlikely to reward narratives without concrete usage data.
A Very Different Outcome If the Bill Passes
Should the Clarity Act pass in a form broadly acceptable to the industry, Hougan believes the market response could be immediate and forceful. Clear rules around stablecoins, tokenization, and broader crypto applications would likely unlock institutional participation and trigger a strong rally driven by regulatory certainty.
Rising Tensions Within the Industry
As the debate continues, internal fractures have become more visible. Citron Research has accused Coinbase CEO Brian Armstrong of opposing the Clarity Act to protect existing stablecoin revenue models. These claims followed Coinbase’s decision on January 14 to withdraw support for the bill, citing concerns around tokenized equities, DeFi privacy, stablecoin rewards, and expanding SEC authority.
Taken together, these developments highlight that the Clarity Act is more than a regulatory proposal—it represents a defining moment for the trajectory of the U.S. crypto market.
You can also freely share your thoughts and comments about the topic in the comment section. Additionally, don’t forget to follow us on our Telegram, YouTube and Twitter channels for the latest news and updates.