CLARITY vote fails, long live CLARITY
After a year’s buildup, the US Senate failed to pass a cloture motion on the Digital Asset Market Clarity (CLARITY) Act.
The motion received just 49 votes in favor and 50 against, well short of the 60 votes required.
However, Republican Senator Thom Tillis’s “no” vote was not all it seemed, and he confirmed he’d only switched sides at the last minute to enable him to call a new vote in future.
So does that mean the CLARITY Act could be resurrected? The GENIUS bill suffered a similar failed vote on cloture and then went on to pass just 11 days later.
While there is a small chance that CLARITY could still pass, the politics and the number of legislative days available suggests it’s unlikely.
Congressman Shri Thanedar, a Democrat who supported CLARITY in the House, told Magazine the timeline was a “major barrier.”
“There are only 20 legislative days left in this Congress, all of them after the midterms, making odds of a 2026 compromise, unfortunately, very low.”
Seven Democratic senators who had voted against the bill claimed they “remain committed” to passing it. At some point. “We were ready to strike a deal today and in discussions right up until the vote. Republican leadership shut it down at the very last minute,” said Sen. Angela Alsobrooks.
NEAR chief legal officer Abhishek Vaidyanathan noted the House had already cancelled two sitting weeks and that the Senate’s state work period began October 5.
“Now that cloture failed, the next Congress is the likely next opportunity to address crypto market structure,” he said.
SEC Chair proposes new rules in absence of CLARITY
After the failed vote, Ripple CEO Brad Garlinghouse predicted that US regulators will “continue to work hard to issue rules to fill the legislative gap.”
The industry didn’t have long to wait. Two days later the US Securities and Exchange Commission announced a five year long exemption allowing limited trading of tokenized US stocks on decentralized public blockchains.
The Innovation Exemption allows tokenized stocks to be traded using automated market makers, exempting the protocols from having to register as securities exchanges.
However the new rules do not exempt “synthetic” stock tokens that do not provide holders with all the same rights as traditional stocks. This is bad news for pretty much all of the stock tokens issued by xStocks and Robinhood to date.
CFTC swoops in to propose new crypto rules
The Commodity Futures Trading Commission also announced regulatory relief for “passive software” providers that connect users to regulated derivatives firms and exchanges.
It issued a no-action position stating it would not recommend enforcement against qualifying providers for failing to register as brokers when facilitating trading with CFTC-registered firms and exchanges.
The position could make it easier for crypto wallets and other apps to offer access to regulated derivatives, including perpetual contracts and prediction markets.
The CFTC has also submitted draft crypto rules to the White House called the “Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets.” The action is listed at the “prerule” stage meaning it has not yet been formally proposed.
Coinbase this week filed an application with the CFTC to offer 24/5 perpetual futures trading to individual US stocks. Kalshi filed a very similar proposal on the same day.
House committee votes yes to Bitcoin Reserve
The American Reserve Modernization Act of 2026 passed the US House Committee on Financial Services this week. It would formalize in law the current executive order establishing a Strategic Bitcoin Reserve. A Digital Asset Stockpile containing other forfeited cryptocurrencies would also be held within the Department of the Treasury.
The legislation requires all federal agencies to provide a full audit of digital assets they hold and orders them to provide quarterly “proof of reserve” reports.
It would also direct a study of budget-neutral acquisition strategies for buying additional Bitcoin for the reserve. Bitcoin Policy Institute executive director Connor Brown on Wednesday called it a “genuinely historic step for Bitcoin policy.”
The US House Ways and Means Committee also passed the Digital Asset Tax Certainty Act with bipartisan support, advancing legislation aimed at reshaping the federal tax treatment of digital assets.
Revolut’s $3 million ransom demand highlights dangers of ID storage
The theft of sensitive customer data including passports and KYC selfies from Revolut took a turn for the bizarre when a second hacker demanded a $3 million ransom.
Calling themselves “IAmNotAVillain” the actor publicly demanded 6,000 Monero from Revolut within 24 hours or it would sell the customer records to criminal groups.
Earlier a group calling itself “Revolut Smilik” had demanded 10,000 Bitcoin, worth about $780 million, for the data. IAmNotAVillain suggested the demand came from a former associate who only had a small sample of the data.
The theft highlighted the dangers of mandating KYC checks that result in thousands of companies storing ID documents all over the web, which act as honeypots for hackers.
Frustratingly, it’s now possible to verify identity using zero knowledge proofs without sending any identity documents to third parties at all, but the technology is not yet in wide use.
Winners and Losers
At the end of the week, Bitcoin (BTC) is up 5.9% to trade at $81,185, Ethereum (ETH) is up 6.6% to trade at $2,639 and XRP (XRP) is up 5.4% to $1.40. The total market cap is at $2.78 trillion according to CoinMarketCap.
Among the biggest 100 cryptocurrencies, the top three altcoin winners of the week are NEAR Protocol (NEAR) with a 76.4% gain, Arbitrum (ARB) on 64.3%, and Ethena (ENA) on 61.6%.
The top three altcoin losers of the week are Stable (STABLE) which was down 11.6%, Pi (PI) down 11.3% and SPX6900 (SPX) down 1.8%.
Prediction of the Week
Standard Chartered says Arbitrum could increase 70X by 2030
Standard Chartered says layer-2 network Arbitrum’s price could reach as high as $10 by 2030. From current levels, that would represent a roughly 70-fold increase, far exceeding Standard Chartered’s projected returns for Bitcoin (BTC) and Ether (ETH) over the same period.
Geoff Kendrick, Standard Chartered’s global head of digital assets research, said Arbitrum’s economics offer considerable upside because the network receives 10% of the net protocol revenue generated by companies building on it. Robinhood Chain’s fees will push Arbitrum’s September revenue to $5 million, which is a five fold increase from before the new L2 launched in July.
Kendrick said the biggest risks to his ARB price projection include “a slower-than-expected pace of asset tokenization and more competition from alternate blockchains.”
Top FUD Of The Week
State hackers drive 420% surge in onchain malware, Chainalysis finds
State-linked hackers accounted for roughly two-thirds of new activity each quarter as the number of times attackers stored malware instructions or infrastructure information on public blockchains rose 420% over the past 12 months, according to a Chainalysis report.
Chainalysis identified North Korea and Iran-linked operators among the state actors adopting the technique. The analytics firm also connected previously unattributed activity spanning Tron, Aptos and BNB Smart Chain (BSC) to UNC5342, a North Korea-linked group tracked by Google Threat Intelligence.
Chainalysis said using public blockchains increases the durability of malware campaigns because the stored information remains accessible after domains, servers or code repositories are taken down.
BIS paper finds major gap in Bitcoin onchain transfer estimates
Researchers at the Bank for International Settlements found that estimates of Bitcoin onchain transfer values can vary by as much as sixfold depending on how transactions are measured.
The sixfold gap reflects differences between measurement methods, including how change outputs and other transfers back to the sender are treated.
The measurement problem also extends to Bitcoin’s market capitalization. The researchers found that the conventional measure has at times been as much as four times higher than realized capitalization, which values each coin at the price when it last moved.
Hong Kong jails ex-banker over $1.6B false credit, cryptocurrency bribes
A former bank official in Hong Kong who falsely authenticated letters of credit for more than $1.6 billion was sentenced to four years in prison and ordered to make restitution of more than $470,000 he received in cryptocurrency bribes.
Lam Chun-yin, 32, who was a customer relationship manager at China Construction Bank (Asia), had previously pleaded guilty in District Court, The Standard reported on Saturday.
Top Magazine Features of the Week
Is there any chance left to save the CLARITY Act?
CLARITY isn’t dead after failing a key Senate vote, but with time running short and Democrats still demanding changes, its path forward is narrowing.
Bitcoin treasury firms can outperform BTC… but is the risk worth taking?
Bitcoin treasury companies promise to amplify returns over investing in Bitcoin alone, but does the potential upside outweigh the risks to the downside?
Revolut ID thefts highlight KYC’s dangers: Here’s how to fix it
Zero-knowledge technology could let companies verify who you are without storing your identity documents. So why isn’t it already standard practice?
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