CLARITY Act Failure Hands Coinbase a Stablecoin Reward Edge, Bitwise CIO Says

Crypto did not flinch after the U.S. Senate killed the CLARITY Act. Bitcoin climbed roughly 8% in two weeks.

Ether added about 7%. NEAR surged close to 104%, and Uniswap jumped nearly 49%. Bitwise Chief Investment Officer Matt Hougan says that move was no accident.

In a Sept. 30 client memo titled “Why Crypto Rallied When Clarity Failed,” Hougan argues the bill’s collapse handed the industry something better.

“Crypto sacrificed long-term certainty and got better rules, faster,” he wrote.

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Stablecoin Rewards and Exchange Moats Emerge as Clear Wins

The Senate voted 49–50 on cloture on Sept. 15, falling 11 votes short of advancing the CLARITY Act.

White House and Senator Lummis blamed Democrats for derailing the vote, calling it a setback for U.S. crypto leadership. Hougan’s new memo names four groups that actually gained from the failure.

The sharpest fight inside CLARITY Act negotiations was over stablecoin yield. Banks pushed for language that would ban any crypto platform from paying interest or rewards on stablecoin balances.

That language died with the bill. The 2025 GENIUS Act bars issuers from paying interest directly, but it is silent on intermediaries.

Hougan says that gap lets exchanges pay “rewards” on stablecoin holdings with no federal ceiling.

Coinbase has already expanded USDC stablecoin rewards through Morpho’s onchain lending, making it the clearest near-term beneficiary. Established exchanges also keep their competitive moat.

The CLARITY Act would have created a national spot-exchange license, lowering the barrier for new entrants. With the bill stalled, that competitive threat is off the table.

The SEC and CFTC are now writing crypto rules without Congress, and much of what emerged is cleaner than the bill’s compromises would have produced.

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SEC Exemption and Buyback Clarity Drive Tokenization and Token Rallies

Two days after the Senate vote, the SEC issued a five-year innovation exemption. It allows tokenized U.S. listed stocks to trade through permissioned automated market makers and liquidity pools.

The CLARITY Act would have ordered years of rulemaking before anything moved.

Coinbase tokenized stocks are already live on Aave v4 on Base, showing how quickly deployment followed once the exemption landed.

Tokens that use protocol revenue for buybacks were the fourth and loudest winner. Under the bill, a buyback could have pulled a token back into security territory.

Without the statute, SEC guidance clarified that announcing a buyback does not make a functional-network token a security.

That is why NEAR, Uniswap, Hyperliquid, and Pump led the post-vote tape.

Hougan’s risk warning is direct: none of this is statute. A new administration could reverse agency guidance.

His counter is equally direct, two years is enough time for large firms to build onchain, and by then crypto may be too large to roll back.

The CLARITY Act now eyes a revival only after midterm elections, but the market appears to have already priced the current rules as its baseline.