Matt Hougan Doesn't Expect CLARITY Act To Pass Today: 'Calendar Just Gets Too Hard' Afterwards

• Hougan said the CLARITY Act has survived numerous setbacks over four years.
• He rejected banks’ concerns that stablecoins offering rewards could cause significant deposit outflows.
• According to him, the impact on bank deposits would be “minor at best and probably not happen at all.”

Bitwise CIO Matt Hougan doesn't expect the Senate to pass the CLARITY Act on Tuesday, but said failure to advance the bill could leave lawmakers with little time to revive a crypto market-structure framework that he believes could unlock a new wave of Wall Street investment.

“I don't think it's going to pass,” Hougan said in an interview with CNBC ahead of the Senate floor vote. Still, he pointed to the bill’s survival through years of negotiations as a reason not to rule it out.

“This thing has had 150 chances to die over the last four years, and it's never been fully dead,” he said. “If we don't pass today, I think the calendar just gets too hard.”

Bitcoin (BTC) and the overall market trended lower in midday trade on Tuesday. Bitcoin’s price dropped by over 2.5% in the last 24 hours, trading at around $76,300. On Stocktwits, retail sentiment around the apex cryptocurrency continued to trend in ‘extremely bearish’ territory. 

CLARITY Act Could Bring More Wall Street Investment

The CLARITY Act aims to establish a clearer regulatory framework for digital assets, including defining the roles of the Securities and Exchange Commission and the Commodity Futures Trading Commission.

“There is no clarity on regulation of crypto in the U.S. There's no clarity on whether the SEC or the CFTC has jurisdiction over spot crypto assets,” Hougan said.

According to him, clearer rules could attract more institutional capital to the sector. “It would allow more investment from Wall Street. It would push us toward a blockchain-based financial future,” Hougan said, adding that passage “would position America to lead financial market infrastructure for the next 50 years.”

Hougan Says Politics Are Complicating CLARITY Act Vote

Hougan said the debate over the bill has increasingly become political, particularly around ethics restrictions on politicians and government officials participating in the crypto industry.

“I think it's more about politics than it is about policy,” he said, adding that Democrats are seeking additional concessions beyond the ethics provisions proposed by Republicans.

Bitwise CIO Pushes Back On Banks' Stablecoin Concerns

Hougan also pushed back against banks' concerns that stablecoins offering rewards could pull deposits out of the banking system. Citing economic research, he said deposit flight would be “minor at best and probably not happen at all.”

“Why shouldn't we get interest on our stablecoin assets? You know, that money belongs to us, not to the banks,” Hougan said.

According to him, banks are primarily seeking to limit competition. “I think more broadly, the banks are just concerned about competition. They're doing this for regulatory capture,” Hougan said.

Read also: Cathie Wood's ARK Invest Sells Over 1.5M Shares Of Its Own Bitcoin ETF: Also Cuts COIN, CRCL, BMNR Exposure Ahead Of CLARITY Act Vote

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