The Chief Investment Officer of Bitwise, Matt Hougan, has issued a stark warning regarding the future of the cryptocurrency sector. He emphasized that should the Clarity Act fail to pass, the US crypto market would face a challenging “show me” period lasting approximately three years. During this time, the industry would need to demonstrate its value to both everyday Americans and the established financial system.
Initially passed by the US House in July 2025 with bipartisan support, the Clarity Act is currently undergoing scrutiny in the Senate. As of January 2026, the Senate Committee on Banking, Housing, and Urban Affairs is reviewing the legislation, while the Agriculture Committee is involved in discussions related to provisions for the Commodity Futures Trading Commission (CFTC). However, progress has been stalled as lawmakers grapple with key issues, including investor protection measures.
Hougan articulated that the absence of this legislative clarity would leave the current pro-crypto regulatory atmosphere unprotected, susceptible to reversal by future administrations. Instead of being driven by policy expectations, crypto”s growth would hinge on tangible real-world adoption, necessitating the industry to prove the viability of use cases such as stablecoins, tokenized securities, and blockchain-based financial infrastructure.
He likened this potential scenario to the early days of companies like Uber and Airbnb, which thrived in regulatory gray areas until their widespread adoption compelled lawmakers to adjust regulations. For crypto to succeed without the Clarity Act, it would need to similarly demonstrate its significance.
However, Hougan cautioned against assuming success would be guaranteed. If, after a few years, the perception of crypto remains that it operates outside the mainstream financial system, shifts in political leadership could pose significant challenges. Under such circumstances, investors might hold off on rewarding prices until they see clear evidence of real-world utilization.
In contrast, Hougan expressed optimism about the market”s potential if the Clarity Act is enacted in a supportive form. Such an outcome could catalyze a significant rally in the market as investors would likely anticipate growth in areas like stablecoins and tokenization.
As discussions around the Clarity Act continue, tensions within the industry appear to be rising. Recently, Citron Research accused Coinbase CEO Brian Armstrong of opposing the act to shield Coinbase”s stablecoin yield business from heightened competition. This accusation surfaced following Coinbase”s withdrawal of support for the bill earlier this month, citing concerns over tokenized equities, DeFi privacy, and the shifting regulatory authority towards the SEC.
As the industry awaits clarity, the stakes are remarkably high. The outcome of this legislative endeavor could shape the trajectory of the cryptocurrency sector for years to come.
