Coinbase stock surged 8% after the Senate Banking Committee advanced the CLARITY Act in a 15 to 9 bipartisan vote.

The Senate Banking Committee passed the Digital Asset Market Clarity Act on May 14 by 15 votes to 9, with support from two Democratic senators providing the bipartisan margin that moves the bill toward the full Senate.

Coinbase CEO Brian Armstrong had backed the current version of the bill ahead of the vote, calling it “closer than ever” to becoming law and describing the stablecoin yield compromise as a result “both sides left a little bit unhappy” with — a sign, he said, that negotiators found a genuine middle ground.

Coinbase (COIN) led gains among crypto-linked equities, surging 8% as investors priced in the possibility that clearer regulatory rules could accelerate institutional participation in digital assets.

Bitcoin rose to $82,000 shortly after the vote before retreating to approximately $81,500, up 2.5% over 24 hours. Strategy (MSTR) climbed 7%, while Ethereum-focused treasury firm Bitmine (BMNR) advanced 5.6%. The broader risk-on mood extended beyond crypto, with both the Nasdaq 100 and S&P 500 pushing to fresh record highs on the same day.

What comes next for the CLARITY Act

As crypto.news reported, the stablecoin yield compromise between Senators Thom Tillis and Angela Alsobrooks was the final major hurdle cleared before the committee vote.

The full text, published by the Senate Banking Committee, runs to 309 pages and still contains unresolved ethics language around government officials’ crypto holdings that Democrats demanded before supporting the bill at floor stage.

The CLARITY Act must still clear the full Senate with a 60-vote threshold, which requires additional Democratic support beyond the two senators who voted yes in committee.

It must then be reconciled with the version the House passed 294 to 134 in July 2025 before reaching the White House. Senator Bernie Moreno had warned that failure to advance the bill by end of May could shelve crypto market structure legislation for years.

The committee vote gives the bill its clearest legislative path since it stalled in January, when Coinbase temporarily withdrew support over the stablecoin yield provisions now resolved through the Tillis-Alsobrooks compromise.

A New York federal court has paused ruling on Aave’s emergency bid to unfreeze approximately $71 million in ETH tied to the Kelp DAO hack, delaying a decision until a June hearing while the court seeks additional information from both sides. The dispute centers on whether Arbitrum’s freeze of the funds should be lifted to support ongoing recovery efforts after one of DeFi’s most significant exploits this year.

Aave contends that unlocking the funds is necessary to prevent forced liquidations and potential destabilization of DeFi markets, while a restraining notice filed by Gerstein Harrow LLP asserts that its clients have a claim to the assets. The Southern District of New York case under Judge Margaret M. Garnett has drawn attention for how courts balance crypto asset freezes against creditor interests and user protection.

Documents filed in the court indicate that Judge Garnett found Aave’s prior briefing insufficient to show how continuing the restraining notice would cause “compounding losses” to user funds if kept in place, signaling the need for more detailed briefing before any ruling. The judge described the matter as complex and vulnerable to near-term harm to Aave LLC and Aave Protocol users, and ordered both sides to provide supplemental submissions ahead of a June 5 hearing.

Key takeaways

• The court postponed ruling and ordered supplemental briefing, citing the case’s complexity and potential near-term harm to users.
• Briefs are due by May 22, 2026, with a hearing scheduled for June 5, 2026.
• The court identified six information gaps for clarification, including whether the shelter principle applies under New York law, the distinction between fraud and theft and the hackers’ interest in stolen assets, which law governs creditor priority over frozen assets, the potential use of a constructive trust, and whether Aave or Arbitrum can identify individual victims to enable pro rata restitution.
• Recovery steps for Kelp DAO: rsETH backing is being restored and the burned tokens will be reconciled; about $278 million in lost tokens will be restored over roughly two weeks from the Aave Recovery Guardian multisignature wallet, pending contract reactivation.
• The case highlights regulatory and policy considerations for DeFi asset freezes, creditor rights, and cross-border enforcement in the evolving landscape of crypto oversight.

Judicial probes into the Aave restraining notice

The SDNY proceedings center on Aave’s motion to unfreeze the ETH tied to the Kelp DAO exploit. Judge Garnett acknowledged the challenge of applying traditional remedies to a decentralized finance scenario and requested detailed briefing to better map the legal framework. In particular, she asked the parties to address how a shelter principle under New York law could interact with the restraining notice, and how such freezes should be reconciled with the transnational nature of crypto assets.

Among the issues identified for clarification are the legal distinction between fraud and theft and the extent to which hackers retain any interest in stolen assets, which law governs creditor priority over frozen property, whether a constructive trust would be an appropriate remedy, and whether either Aave or Arbitrum can identify individual victims to enable pro rata reimbursement. The court’s questions underscore the delicate balance between protecting users and honoring creditor interests in DeFi contexts, and the need for precise legal framing in this rapidly evolving space.

As noted in court filings, the parties have until May 22 to submit supplemental briefs, with the June 5 hearing set to adjudicate unresolved questions. The outcome could influence how future DeFi-related freezes are treated under U.S. law and may shape institutional approaches to recovery, enforcement, and compliance for lenders, exchanges, and wallets operating in cross-border environments.

Regulatory and policy context for frozen DeFi assets

Industry observers view the case as a focal point for broader regulatory and enforcement considerations surrounding DeFi asset freezes. While protocols may implement automatic or voluntary freezes to facilitate recovery, courts must determine how these actions align with doctrines on priority of claims, constructive trusts, and user protections. The proceedings touch on how regimes like MiCA and U.S. agencies—such as the SEC, CFTC, and DOJ—may evaluate asset freezes, civil actions, and enforcement associated with DeFi exploits.

Analysts also weigh implications for cross-border operations and banking compatibility, especially for entities seeking to safeguard customer assets while remaining compliant with AML/KYC requirements. The June decision could influence how exchanges and liquidity venues structure recovery processes and how courts treat frozen funds in multi-party incidents.

Kelp DAO recovery steps and broader implications for DeFi asset recovery

Parallel to the court proceedings, Kelp DAO and Aave have outlined concrete steps toward restoring the compromised rsETH backing. The hacker’s rsETH on Arbitrum has been burned, while the tokens lost in the incident—valued at approximately $278 million—are expected to be restored over the next two weeks from the Aave Recovery Guardian multisignature wallet. Once the related smart contracts are reactivated, rsETH usage is anticipated to return to normal, stabilizing the ecosystem’s collateral and liquidity framework on the affected chain.

These recovery actions illustrate a growing practice of coordinated asset restitution within DeFi ecosystems, while raising questions about victim identification and proportional compensation in decentralized environments. The Kelp‑Aave updates emphasize resilience and post-incident recovery even as legal proceedings unfold in parallel.

Source: Kelp DAO status and related announcements, with corroboration from court filings and industry reporting.

Related coverage: DeFi can freeze stolen funds, but not everyone agrees it should.

Watching the June proceedings will be essential for compliance, risk management, and governance considerations across DeFi protocols and their banking and legal counterparts.

The Clarity Act cleared the Senate Banking Committee 15 to 9 on Thursday, sending Bitcoin above $82,000 for the first time in weeks.

The Clarity Act advanced out of the Senate Banking Committee on Thursday in a 15 to 9 bipartisan vote, clearing a critical legislative gate for the most significant crypto market structure bill in US history. Bitcoin (BTC) climbed above $82,000 following the vote before retreating slightly to around $81,500, up approximately 2.5% on the day.

Two Democratic senators crossed the aisle to back the bill alongside all 13 Republicans on the committee. Chairman Tim Scott had described securing all 13 Republican votes as “the red zone,” with Senator John Kennedy having withheld support in the days leading up to the session.

Cody Carbone, who heads the Digital Chamber, told reporters the unresolved ethics provision around lawmakers trading crypto tokens remains the most likely obstacle before a floor vote. “I imagine the deal will be completed before this goes to the floor, because they’ll want to only bring it to the floor if they feel confident they’ve got 60,” Carbone said.

What the Clarity Act does

The Digital Asset Market Clarity Act, which already passed the House 294 to 134 in July 2025, would draw a statutory line between the SEC and the CFTC. Digital commodities would fall under CFTC oversight and digital securities would remain under the SEC, ending years of regulatory uncertainty that has suppressed institutional flows into US crypto markets.

The bill still needs 60 votes on the Senate floor, reconciliation with the Senate Agriculture Committee version, and alignment with the House text before reaching the president’s desk. The full 309-page bill text is available at congress.gov. Senators Lummis and Moreno have both warned that missing the Memorial Day recess deadline on May 21 could push the next viable legislative window to 2030.

White House adviser Patrick Witt has indicated the administration will not accept ethics provisions targeting the president specifically, adding a further layer of negotiation before the floor vote can proceed. Democratic senators have linked their support to broader ethics language covering all lawmakers and officials.

Coinbase VP Kara Calvert said at Consensus 2026 that bipartisan backing is non-negotiable and the bill needs at least 60 votes to advance. For Bitcoin, now trading around $81,500, the committee vote functions primarily as a confidence signal.

The bill’s relevance to BTC is less about its own commodity classification and more about what a settled US digital asset framework does to institutional risk appetite across the broader market.

The Tether freeze coalition known as T3 FCU has surpassed $450 million in blocked illicit USDT since launching in 2024.

The T3 Financial Crime Unit, a joint initiative backed by Tether, TRON, and blockchain analytics firm TRM Labs, has crossed $450 million in frozen assets linked to suspected criminal activity. The milestone was announced by Tether on Thursday, less than two years after the unit launched in 2024.

T3 FCU focuses on USDT activity on the TRON blockchain, where Tether’s dominant stablecoin circulates at scale. The unit has executed asset freezes within 24 hours of requests from global authorities, including during active kidnapping and extortion emergencies.

T3 FCU reported intercepting 43.9% more illicit proceeds in 2025 than the previous year. It has worked with law enforcement across 23 jurisdictions, including the United States, Spain, Germany, the Netherlands, and Bulgaria.

“This $450 million milestone is just the beginning of what T3 is capable of, as its impact will only continue to grow in scale and importance,” Tether CEO Paolo Ardoino said.

What T3 FCU targets

The unit’s caseload spans drug trafficking, exchange hacks, North Korea-linked activity, terrorist financing, and violent “wrench attacks” including kidnappings. The Financial Action Task Force this year designated T3 FCU an invaluable resource for law enforcement agencies worldwide.

The $450 million figure sits within a wider enforcement picture. As crypto.news tracked, Tether blacklisted 371 wallets and froze over $515 million in USDT in a single 30-day window this year, with Tron accounting for the majority of that activity.

The unit passed the $300 million mark in October 2025 following its role in Brazil’s Operation Lusocoin and a $19 million seizure tied to North Korea’s involvement in the Bybit hack. The jump from $300 million to $450 million in under seven months signals a significant acceleration in operational tempo.

TRM Labs estimates total illicit crypto flows reached $158 billion in 2025, a record. T3 FCU’s expanding role has sharpened the debate over how far centralised stablecoin issuers should go in policing decentralised networks. TRON has described itself as an agnostic technology provider, with enforcement capability sitting with Tether, TRM Labs, and law enforcement rather than at the protocol level.

Unlike decentralised assets such as Bitcoin, USDT carries issuer-level controls that allow wallets to be frozen at any time. Whether that capability represents a necessary safeguard or an unacceptable concentration of private power remains one of the most contested questions in stablecoin policy.

TLDR:

• Bitwise’s $BHYP ETF offers 100% direct spot HYPE exposure using in-house staking, not third-party providers.
  
• Hyperliquid controls roughly 60% of global onchain perpetual DEX open interest as of May 13, 2026.
  
• The fund carries a 0.00% expense ratio for the first month, then shifts to 0.34% for investors thereafter.
  
• $BHYP is not registered under the 1940 Act, meaning it lacks standard mutual fund protections for investors

Bitwise Hyperliquid ETF, trading under the ticker $BHYP, has officially entered the market. It offers investors 100% direct exposure to spot HYPE.

Unlike similar products, $BHYP uses in-house staking instead of a third-party staking provider. The fund began trading on May 15, 2026.

Bitwise positions this ETF as a low-cost entry point into Hyperliquid, a platform the firm views as central to the future of onchain capital markets.

Hyperliquid’s Growing Role in Global On-Chain Trading

Bitwise took to X on May 14, 2026, to announce the ETF and explain its rationale. The firm wrote: “We believe Hyperliquid is one of the most important onchain trading platforms in the world.” That statement came alongside the fund’s launch announcement ahead of its first trading day.

Hyperliquid currently holds approximately 60% of all onchain perpetual DEX open interest globally, according to DeFi Llama data from May 13, 2026.

That figure alone places Hyperliquid well ahead of competing platforms in the sector. Bitwise cited this directly in its announcement as a core reason for the product launch.

The platform also processes up to 200,000 orders per second, as tracked by Chainspect on the same date. This capacity supports high-frequency activity without the bottlenecks common to other decentralized exchanges. That kind of throughput draws institutional attention for good reason.

Bitwise also pointed to a specific moment as evidence of Hyperliquid’s real-world importance. When geopolitical conflict erupted in the Middle East on a Sunday morning, traditional markets were closed. Institutions, however, did not wait for Monday. They turned to Hyperliquid to execute trades in real time.

What $BHYP Offers Investors and How the Fund Works

The Bitwise Hyperliquid ETF starts with a 0.00% expense ratio for its first month of trading. After that initial period, the expense ratio moves to 0.34%.

Bitwise has agreed to waive the full sponsor fee on the first $500 million of trust assets during the opening month.

The fund intends to distribute net investment income, including staking rewards net of expenses, to shareholders on a periodic basis.

Staking rewards, however, are not guaranteed. They are subject to change and should not be treated as a performance indicator.

Additional costs such as brokerage and commission fees may also apply beyond the stated expense ratio. Investors are advised to read the prospectus carefully before committing capital. The current prospectus is available at bhypetf.com/welcome.

It is also worth noting that $BHYP is not registered under the Investment Company Act of 1940. As a result, it does not carry the same protections as mutual funds or ETFs that fall under that framework. The fund carries a high degree of risk and the potential for complete loss of investment.