Unsurprisingly, digital asset insiders were focused on the CLARITY Act this week. Not completely, however. Read on to find some interesting takes on several other topics.
The CLARITY Act
“The nation’s banks continue to support creating a strong, durable regulatory framework for digital assets that will set the course for U.S. global leadership for decades to come. We believe Congress can accomplish that goal while protecting the bank lending that drives economic growth. As lawmakers consider next steps, we encourage them to adopt targeted changes to stablecoin yield policy. We stand ready to work with all stakeholders to achieve this important goal.”
–Independent Community Bankers of America, the American Bankers Association, Association of Military Banks of America, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, Mid-Size Bank Coalition of America and National Bankers Association joint statement
“The failure of the CLARITY Act is a huge setback for our industry, though not a fatal one. For years, crypto companies have operated in a legal gray zone, with regulators taking a rule by enforcement, knee-jerk approach that punished innovation instead of guiding it. Unfortunately, that era isn’t over.
“The CLARITY Act would have finally given us what we’ve been asking for: a clear line between what the SEC regulates and what falls under the CFTC. Instead, digital commodities remain without a defined home, stablecoin rules stay disconnected from the progress made under the GENIUS Act, and projects are still stuck guessing whether raising capital or bringing a token to market will get them sued.
“For founders and builders, that means continuing to operate on hope instead of rules. It also means institutional volumes stay on the sidelines longer than they need to, and the bigger wave of incumbent participation the market is waiting for gets pushed further out.
“None of this changes where digital assets are headed. Banks will still move to adopt stablecoins, and blockchain rails will still become the foundation of modern finance, clarity or no clarity. But every delay like this one is a missed chance for the US to cement its role as a leader in innovative financial technology. Consumers, institutions, and builders all deserve certainty, and until Congress finishes the job, they’ll keep operating without it.”
– Bernardo Brites, co-founder and CEO, Trace Finance
“While the debate about the pros and cons of the CLARITY Act will rumble on with its failure to pass today’s vote, I’m still a firm believer that imperfect regulation is better than no regulation at all.
“A regulatory framework, such as the CLARITY Act, can have a catalyzing effect of infusing large U.S. enterprises and institutions with genuine confidence to finally participate in the digital assets space with assurance, where before they likely actively avoided this market.
“We’ve seen a similar scenario play out regarding the passage of the GENIUS Act, as the creation of regulatory guardrails has spurred faster adoption of stablecoin payment options amongst large companies, as well as building consumer trust in this form of payment.
“While the failure of this vote to pass represents a setback for formal oversight in the U.S., the broader trendline remains clear. Progress across the EU, UK, UAE and Singapore continues to build global momentum toward regulatory harmonization and, ultimately, institutional adoption of digital assets.”
– Eric Barbier, CEO, Triple-A
“Crypto will be fine without the Clarity Act. The US still has two agencies, the SEC and CFTC, that are ready and willing to push the industry forward. “Blockchains will continue to produce blocks, and stablecoins are already covered under the Genius Act. I have no doubt adoption will continue, and regulation will catch up to adoption.”
– Alex Witt, founding general partner, Verda Ventures
“Bitcoin liquidations on Tuesday hit the 93rd percentile of the past 90 days, and almost all of them were longs. That is the footprint of a market that had positioned for a yes vote and was forced to unwind when it didn’t come — a positioning reset, not a verdict on the asset.
“XRP fell 8.27% on the CLARITY vote, more than three times Bitcoin’s move. On CMC’s narrative board, the three regulation-linked narratives all carry ‘Ripple’ as a top social keyword. The market had chosen XRP as its expression of US regulatory clarity, so it is XRP that is now giving that trade back.”
– Alice Liu, head of research, CoinMarketCap
“The recent Senate vote is disappointing. Statutory market-structure rules would have given the industry more durable clarity. That said, LitVM was never contingent on this bill. Litecoin remains a proven payments network, and we are building an opt-in ZK EVM layer so developers can add DeFi, RWAs, and other applications without changing Litecoin’s base layer. Policy will keep evolving. Our job is to keep shipping.”
– Aztec Amaya, co-founder of LitVM, Litecoin’s Virtual Machine
“The CLARITY Act failing to advance is a setback for Bitcoin’s push into everyday retail payments. Big retailers need clear rules around compliance, custody, and settlement before they can comfortably build Bitcoin into checkout at scale. Without that certainty, we’ll probably see more pilots and third-party payment options rather than widespread integration. The demand and technology aren’t disappearing, but regulation matters when you’re talking about millions of transactions. This delay keeps Bitcoin closer to an investment asset than a normal way to pay.”
– John Ioannou, founder, CryptEscrow
“Bitcoin dropping as hopes around the CLARITY Act fade shows just how much regulatory uncertainty still hangs over crypto. The market wants clear rules, and every delay makes it harder for businesses and investors to plan with confidence. That said, I wouldn’t read too much into one 3% move. Bitcoin is also dealing with wider pressure from rates and the Fed. The bigger issue is whether Washington can finally give crypto companies a framework they can actually build around.”
– Joshua Kim, founder and CEO, DonaFi
”The partisan politics behind the Clarity Act not passing, which has nothing to do with any legitimate concerns around the safety or viability of bitcoin, is intended to provide talking points about President Trump’s crypto holdings going into the midterms. It’s a shame that politics is preventing common-sense regulation, but this result has been anticipated for months and will not extend the bear market. The SEC and CFTC have moved ahead with their own pro-crypto policies, so there is nothing the non-passage of this bill will prevent, other than keeping some big institutions away from the asset class until some version of it passes.”
– Michael Terpin, CEO, Transform Ventures
“The Senate failed to advance the CLARITY Act, leaving one of the most important pieces of US digital asset legislation facing a much harder path forward. Bitcoin fell following the vote, while Coinbase, Circle and other crypto-linked stocks came under heavy pressure.
“The reaction tells us exactly how much value investors have already attached to regulatory certainty. Institutional capital needs to know who regulates what, how assets are classified, what intermediaries can do and where the SEC and CFTC sit. When those answers get delayed, capital has to price that uncertainty. “Regulation is part of market infrastructure, but today investors put a price on its absence.
“That matters far beyond one day of trading. Legal certainty affects custody, product design, counterparty risk, balance-sheet allocation and whether major institutions can participate at all. Washington can move digital asset markets without touching a blockchain.”
– Ryan Kirkley, co-founder and CEO, Global Settlement Network
DeFi’s $20 Billion Question
“DeFi has its own headline problem. Ethereum and Solana have posted huge increases in dollar-denominated TVL, but token prices have risen much faster than stablecoin supply. Since TVL is measured in dollars, a token rising 30% can make a protocol look dramatically larger even if very little fresh capital actually entered it.
“So when I see billions added to DeFi TVL, my first question is simple: how much new money actually came in? Higher asset prices still matter. They raise collateral values and can support more borrowing and activity. But they are not the same thing as deeper liquidity.
“That is why stablecoin supply, net inflows, borrowing activity and settlement volumes deserve much more attention than headline TVL. Stablecoins give us a much cleaner signal because they show where deployable dollar liquidity sits inside digital markets.
“That matters when rates are high, regulation is uncertain, and institutions are far more deliberate about where capital sits. The practical questions are straightforward: where is the liquidity, how quickly can it move, what can it settle against, and what happens when volatility hits outside banking hours? Those are infrastructure questions, and they matter more than another headline about billions of dollars moving into DeFi.
“The Fed is changing the price of capital. Washington is deciding the rules around it. DeFi is showing us how difficult it can be to measure the liquidity underneath it. Settlement connects all three.
When rates move, capital moves. When regulation changes, institutions reposition. When token prices fall sharply, collateral values and liquidity requirements can change within minutes. The market does not wait for the infrastructure underneath it to catch up.
”
– Kirkley
The US Federal Reserve
“The Fed’s 25-basis-point hike was largely expected, so I would focus more on how markets interpret the path from here. With 16 of 18 policymakers seeing at least one more hike this year and the median year-end rate at 4% to 4.25%, rates are likely to stay restrictive for longer than investors had hoped. At the same time, the Fed’s growth outlook was revised higher, which suggests policymakers are not seeing an economy that is close to breaking. If inflation starts moving lower, there is still a path for the Fed to pause without needing to push rates materially higher.
“For Bitcoin, I would watch Treasury yields and liquidity more closely than the 25-basis-point move itself. Bitcoin has already absorbed a significant amount of higher-rate expectations, and if yields stabilize, the asset can continue to trade on institutional demand and improving liquidity rather than simply on Fed policy. If markets start pricing in several additional hikes, that would put more pressure on risk-on assets. For now, I see this as a period of tighter financial conditions rather than a fundamental change in Bitcoin’s longer-term market structure.
“Warsh has argued that the AI buildout could eventually deliver a meaningful productivity boost, even as the investment cycle is currently adding to demand and costs. If that productivity starts showing up in the wider economy, it could give the Fed more room to ease later without reigniting inflation. That would be a constructive setup for risk assets, including crypto, because the market could move from worrying about the cost of AI investment to pricing in the economic growth it can ultimately produce.”
– Markus Levin, co-founder, XYO
“AI is a productivity story, but right now it is also an inflation story.
“The scale of investment going into data centres, chips, software, power and infrastructure is supporting growth while adding pressure to parts of the economy. That puts the Fed in a difficult position because the productivity gains may arrive later, while the spending and inflation pressure are happening today.
“For markets, that matters immediately. If AI investment keeps growth resilient while inflation stays uncomfortable, the Fed has less room to ease and may have to tighten again.
“Crypto cares because higher rates change the price of risk. When Treasury yields rise and the dollar strengthens, capital gets more selective, and leveraged positions feel it first. Bitcoin may trade 24/7, but it still trades inside the global liquidity cycle.”
– Kirkley
Aave
“Aave’s proposal to accept custodied collateral shows how DeFi is adapting its lending model around how institutions already hold assets, rather than requiring them to move everything into a shared on-chain pool. Under the proposal, the collateral stays with the custodian, with its state synchronized on-chain.
“The underlying need is not new. Investors have long borrowed against equities and other assets rather than selling them. What is changing is the infrastructure around digital assets, making similar financial flexibility possible in on-chain markets.
“We work on the same problem for individuals. The mechanics matter less than the safeguards around them, including how much people can borrow, how closely positions are monitored, and what happens when the market moves against a position.
“For individuals, the next step is making borrowing against digital assets easier to use and the risks easier to understand. As digital assets become a larger part of people’s wealth, many holders still have limited ways to access that wealth when they need capital. Selling is often still the simplest option, but it should not be the only one.”
– Artem Ponomarev, founder and CEO, XPlace
Enova drops national bank bid
“Enova intended to use a national bank charter to make loans with 100% annual interest across the country that virtually every state forbids. Triple-digit interest rate lenders should not be allowed to turn a national bank charter into a license to prey on people struggling to make ends meet.
“Bank regulators have good reason to look critically at predatory lenders with enormous default rates. OppFi, which charges even more outrageous rates of up to 195% APR, should abandon its national bank aspirations, as well.
“Congress shouldn’t unleash predatory lenders on people who are already experiencing record debt, rising prices, and an affordability crisis. Congress must reject bills that enable predatory lending, must pass national interest rate limits, and must eliminate the right of banks to ignore state interest rate limits.”
– Lauren Saunders, senior attorney, National Consumer Law Center