2 min readDespite open questions around the CLARITY ACT, Bitcoin turns green
Regulatory developments in Washington were in focus this week as the Senate Banking Committee continued work on the Digital Asset Market CLARITY Act – crucial for the ongoing development of the stablecoin industry. Originally framed as a market-structure bill, the legislation has expanded into a broader crypto policy framework covering stablecoins, DeFi, customer protections, and illicit finance. Across drafts, regulation consistently turns on control and custody, with obligations linked to who exercises decision-making authority rather than whether an activity is labelled centralized or decentralized. This approach underpins the treatment of DeFi and stablecoins, where lawmakers are seeking to distinguish non-custodial software and payment infrastructure from intermediaries and yield-generating financial products.
US policy remains uncertain
Despite this conceptual progress, near-term legislative outcomes remain highly uncertain. A Senate Banking Committee markup session scheduled for January 15 was delayed following significant industry pushback, including the public withdrawal of support by Coinbase’s CEO over provisions related to tokenized equities, stablecoin yield, and DeFi restrictions. Chair Tim Scott reiterated that bipartisan negotiations are ongoing, but no vote has yet occurred as lawmakers attempt to refine language and secure sufficient support. Importantly, the Senate amendment currently under discussion would broaden rather than narrow the bill, expanding into areas such as securities tokenization, DeFi cybersecurity, stablecoin economics, and illicit finance. Whether the committee ultimately advances a comprehensive substitute or pares the legislation back to a more focused market-structure bill will be critical for both passage prospects and the longer-term regulatory impact on the digital asset industry.
From a macro perspective, inflation data was mixed. Headline CPI met consensus expectations, but underlying details were less encouraging, with ongoing pressure in services, parts of goods, and food. Core services remain above the Fed’s preferred pace, food prices recorded their largest monthly jump since August 2022, and core goods were flattered by a sharp decline in used car prices. Bitcoin reacted positively as expectations for a March rate cut initially rose, though a strong retail sales print of 0.6% month-on-month, alongside lower jobless claims, subsequently reversed some of that easing optimism.
Positioning remains cautious, with continued whale selling evident, though crypto flows showed a notable positive signal with US$2.5bn of inflows so far this week, the strongest overall figure since early October, prior to the 10th October market panic. We believe this signifies a meaningful positive shift in sentiment as macro and policy cross-currents continue to evolve.
