A failure to pass the CLARITY Act this week will put the bill in a “walking dead” state, but won’t stop the crypto industry’s march forward, according to Bitwise chief investment officer Matt Hougan. 

In a blog post on Wednesday, Hougan said while many, including himself, have called it the “make or break” week for the CLARITY Act, the reality is that the crypto industry has made too much progress to “go back in the bottle.” 

“The reality is that Washington is always late to major technology shifts, and it has rarely mattered as much as people feared,” said Hougan. 

His comments come as the Senate faces an Aug. 5 deadline to advance the landmark crypto market structure bill before its summer recess, with many concerned that failure to pass this week could see the bill pushed into the next year as lawmakers focus on the midterm elections in November. 

Prospects for CLARITY this year fade

Market observers are increasingly pessimistic about the CLARITY Act’s passage this year. In July, Galaxy Research lowered its probability of the CLARITY Act passing in 2026 to 30%, while Polymarket currently shows a 23% chance of it being signed into law this year, down from 82% in February. 

On July 24, NYDIG global head of research Greg Cipolaro said the latest draft was more complete but still lacked sufficient bipartisan support.

“The central investor takeaway is that Republicans have produced a substantially more complete bill, but not yet one with a credible path to 60 votes,” Cipolaro said.

According to sources speaking to Punchbowl News, without signs of progress from the White House on a bipartisan ethics deal, and movement on illicit finance and stablecoin yield, Senate Democrats will deny cloture for the crypto bill. 

Polymarket odds for the CLARITY Act passing in 2026 are at 23%. Source: Polymarket

Hougan said failure to pass the bill will put it in a “walking dead” state, stalled, but not permanently defeated. He said there is some hope that the bill could pass in September, or even in December, when Congress returns for a lame duck session.

“Congress often bundles multiple bills into a year-end “omnibus” package, forcing legislators to vote on a single bill that includes things they like and things they hate. Maybe the Clarity Act can pass that way.”

“Crypto will be fine,” Bitwise’s Hougan says

If the CLARITY Act fails to pass this year, Hougan said that the industry will fall back to the SEC-CFTC’s joint interpretation issued in March, which classifies Bitcoin and other assets as digital commodities and replaces the SEC’s 2019 staff guidance. 

SEC Chair Paul Atkins reinforced this last week, saying his agency is “ready, willing, and able to come out with rules that address the same issues as CLARITY and other aspects of the crypto market.” 

Related: CLARITY Act failure could send crypto valuations lower: Bernstein

However, the rules issued by the two regulators aren’t as durable as legislation, and could be challenged in court or reversed by a future administration. Atkins even acknowledged this in March when the two agencies released the interpretation. 

Source: Cynthia Lummis

“Only Congress can ensure that regulation in this area is future-proofed through comprehensive market structure legislation,” Atkins said.

WisdomTree chief legal officer Ryan Louvar has argued that the absence of legislation would continue to impede the market, despite the regulators’ efforts.

“A market cannot function well when its participants cannot tell in advance which agency’s rules apply to them,” Louvar said at a July congressional hearing.

Hougan said “crypto will be fine” despite this, as it would still give the industry two and a half years to accelerate before a new administration could potentially install a new SEC.

“Washington is dysfunctional. It seems crazy to me that we can’t get our act together to pass legislation that would improve investor protections and spark new innovation,” said Hougan.

“But it’s not a referendum on crypto’s validity as a pillar of the global financial infrastructure. That ship has long since sailed. At this point, crypto has enough momentum that it will reshape finance for decades, regardless of what happens in the next few days.” 

Magazine: CLARITY hopes fade, BitMEX shuts as lawsuit looms: Hodler’s Digest, July 26 

Validators would still be paid the same way for doing the same work, and they keep all the transaction fees and tips they earn from building blocks. Only the newly created ETH gets burned. The deduction from validator rewards arrives slowly, phasing in over 18 months, with about six months before that while the upgrade ships, so roughly two years to adjust.

Six researchers signed the proposal, including Justin Drake of the Ethereum Foundation. It landed days before the deadline for smaller changes to be considered for Hegotá, Ethereum’s next network upgrade.

The problem, as the authors see it, is that staking never stops paying. Even if every ETH were staked, the yield would still sit near 1.5%, so there is always a reason to add more.

Jérôme de Tychey, one of the proposal’s authors, projects more than 70 million ETH staked by January 2028 if nothing changes. Past a certain level, the proposal states, extra stake makes Ethereum less secure rather than more, because the ETH ends up held by exchanges and staking providers instead of its owners, while small individual stakers get squeezed out.

About 41 million ETH is staked today, or close to 34% of supply. Another 2.5 million sits in the queue waiting to be activated, trackers show, a wait of six weeks or more, and nobody is queuing to leave.

Ethereum limits how fast validators can join or leave, so both directions form a line. The cap exists so a large bloc can’t enter or exit fast enough to destabilize the network. Entry queue is ETH waiting to start staking, exit queue is ETH waiting to stop. Currently about 57,600 ETH a day can activate.

Bybit has taken another step toward expanding its regulated business in Europe after its Austria-based payments unit, Bybit Payments GmbH, received an electronic money institution (EMI) license from the country’s Financial Market Authority. The approval gives the exchange a clearer regulatory foundation to introduce payment-related products alongside its existing Europe-focused platform.

In an announcement shared on Tuesday, Bybit said the EMI authorization enables its future payment capabilities, which may eventually include person-to-person transfers, merchant payment services, open banking functionality, and card products. For users and partners, the practical impact is that Bybit is positioning to offer payment rails and e-money services under a supervisory framework rather than relying solely on third-party arrangements.

Key takeaways

• Bybit Payments GmbH has received an electronic money institution license from Austria’s Financial Market Authority.
• The authorization is intended to support future payment and e-money products, potentially including P2P, merchant solutions, open banking, and cards.
• Payments will be offered through Bybit.eu alongside existing services from a separate Austrian crypto-licensed entity.
• Bybit EU GmbH continues to operate under EU MiCA authorization (granted in May 2025), with responsibilities kept distinct from the EMI permissions.
• Bybit stated Malta is excluded, citing MiCA passporting requirements that must be met for each jurisdiction.

Austria approval lays groundwork for regulated e-money and payments

The EMI license centers on Bybit Payments GmbH’s ability to provide regulated electronic money and payment services. Bybit did not describe a specific go-live date for any particular product, but it tied the authorization to a broader plan to expand payments features as they are introduced.

For institutional and business users, this matters because payment services typically require ongoing regulatory oversight that extends beyond exchange operations. By obtaining an EMI license, Bybit can create a more direct, jurisdictionally supervised pathway to integrate with banks, payment providers, and enterprises—potentially improving operational control and reducing dependence on external payment infrastructure.

How Bybit plans to split roles across two Austrian entities

Bybit’s European structure now hinges on two different Austrian entities, each carrying different regulatory permissions. The exchange said Bybit Payments GmbH will manage the EMI and payment-related activity as e-money and payment products are launched. Meanwhile, Bybit EU GmbH—another Austrian entity—remains responsible for crypto services under EU Markets in Crypto-Assets Regulation (MiCA).

According to Bybit, Bybit EU GmbH is authorized to provide crypto custody, exchange, placement, and transfer services. This separation is designed to keep permissions and obligations distinct: one entity under the crypto regime for crypto-asset activities, and the other under the payments regime for electronic money and regulated payment products.

Bybit also said both services will be made available through Bybit.eu, suggesting the user-facing platform will continue to act as a single destination while the underlying compliance responsibilities are managed by the appropriate licensed entity.

Which regions will have access—and why Malta is missing

Bybit Payments GmbH’s services are expected to run through Bybit.eu for users across the European Economic Area (EEA), with an exception: Malta.

Bybit did not give a specific operational reason for the exclusion. Instead, it referenced its own website guidance, stating that services are offered only in jurisdictions where applicable MiCA passporting requirements have been met. The statement suggests that regulatory coverage for the overall Bybit offering—including how crypto and payments are packaged for particular regions—depends on whether passporting conditions have been satisfied.

For readers, the key takeaway is that licensing alone may not automatically translate into immediate availability across every EEA jurisdiction. Even when an entity is licensed in one country, market access can hinge on broader cross-border permissions tied to the regulatory framework involved.

Why the milestone could change how Bybit partners with banks

Beyond product expansion, Bybit framed the EMI license as a relationship-strengthening development with banks, payment providers, and enterprises. Bybit suggested the new approval could also reduce reliance on third-party payment infrastructure.

That shift is particularly relevant in Europe, where fintech and crypto firms often face a trade-off: speed to market versus the cost and complexity of building and maintaining compliant payment operations. Establishing an EMI license can support more direct routing of payment flows and potentially help standardize integrations with counterparties. It may also make it easier for partners to understand which part of Bybit’s business is responsible for regulated payment activities.

At the same time, it remains to be seen how quickly Bybit will convert the license into concrete consumer-facing offerings. An EMI authorization provides a regulatory capability, but product rollouts—especially those involving card services or open banking—typically require additional implementation work and coordination with payment networks and partners.

Related: Crypto exchange Bybit launches in Indonesia after NOBI acquisition

Investors and users should watch how Bybit translates the EMI license into specific payment features on Bybit.eu, and whether the exchange later broadens availability to additional jurisdictions currently excluded—particularly Malta. The other open question is the pace of integration between the MiCA-authorized entity and the newly licensed EMI unit, since the two permissions are meant to stay distinct even if the experience is unified.

Bitwise Chief Investment Officer Matt Hougan said on Aug. 4 that the crypto industry would continue expanding even if the U.S. Senate fails to advance the CLARITY Act before its August recess.

In a new investor memo, Hougan said crypto “will be fine” without immediate congressional action. He argued that Securities and Exchange Commission rulemaking could provide an alternative path while traditional financial companies continue adopting digital assets. His assessment is a forward looking industry view, not a confirmed regulatory outcome.

The bill’s immediate prospects remain uncertain. The Senate’s Aug. 4 floor schedule did not include H.R. 3633, and the chamber’s official list of pending cloture motions named two unrelated matters. No cloture filing for the CLARITY Act had been announced by the end of Tuesday’s session.

CLARITY Act faces an Aug. 5 procedural test

Hougan identified Wednesday, Aug. 5, as the practical deadline for Senate leaders to file cloture and preserve a possible Friday procedural vote. Senate Rule XXII ordinarily requires a cloture vote one hour after the chamber meets on the following calendar day but one after filing. Sixteen senators must sign the motion.

Ending debate on legislation normally requires three fifths of senators duly chosen and sworn, or 60 votes when every seat is filled. The measure could move faster under a unanimous consent agreement, but such an arrangement would require cooperation that Senate leaders have not announced.

The Senate Banking Committee approved the bill 15 to 9 on May 14. Senator Cynthia Lummis later released a merged 616 page proposal combining work by the Banking and Agriculture committees. The revised measure remains on the Senate legislative calendar but has not received a full chamber vote.

As crypto.news reported on Aug. 4, government funding legislation and nominations occupied the available floor schedule. The omission does not legally kill the CLARITY Act, but it leaves little time for debate, amendments and a final vote before lawmakers depart.

SEC rules could help but cannot replace the bill

Hougan based his fallback scenario on comments from SEC Chair Paul Atkins, who said the agency was “ready, willing, and able” to address several matters covered by the legislation. Hougan believes rules adopted under Atkins could initially prove more favorable to innovation than compromises required for a bipartisan law. He said they “may even be an accelerant,” although no such effect is assured.

Atkins has supported agency action through Project Crypto, including work on token classifications, capital formation and securities market rules. However, he has also backed congressional legislation. In an official speech, Atkins said statutory language provides the strongest protection against future regulators reversing the current approach.

The distinction matters because the CLARITY Act would divide digital asset jurisdiction between the SEC and Commodity Futures Trading Commission. The updated congressional summary covers token disclosures, digital commodity exchanges, customer property, decentralized finance, stablecoin rewards and anti money laundering requirements.

The SEC can change rules governing securities, registered intermediaries and token offerings within its existing authority. It cannot independently grant the CFTC nationwide authority over digital commodity spot markets. SEC rules could therefore provide part of the framework, but not the complete structure Congress is considering.

As previously reported by crypto.news, agency rules would also be less durable than legislation. A future commission could revise or withdraw them through another regulatory process. A federal statute could only be changed through new congressional action.

Political disputes still threaten Senate support

Seven Democratic senators said on July 22 that the updated Republican text “falls short.” Catherine Cortez Masto, Angela Alsobrooks, Cory Booker, Ruben Gallego, John Hickenlooper, Mark Warner and Raphael Warnock requested stronger rules for elected officials, consumer protection, illicit finance, conflicts of interest and market integrity. They also said negotiations would continue.

The merged bill already contains an ethics division that would restrict covered officials and spouses from issuing or sponsoring digital assets for compensation while in office. It would also require additional financial disclosures. Democrats have not accepted those provisions as sufficient.

Banks are separately seeking tighter restrictions on rewards linked to payment stablecoin balances. The current proposal prohibits interest paid solely for holding stablecoins but allows certain activity and loyalty rewards. Banking groups argue that some exceptions could still resemble deposit interest and draw funds away from community lending.

Prediction markets have created another dispute. Twelve senators asked committee leaders to prevent CFTC registered platforms from listing contracts that resemble sports wagers or casino games. They also requested protections for state authority, tribal sovereignty and tribal gaming compacts.

These disagreements make the 60 vote threshold harder to reach. They also show why SEC action cannot resolve every issue. Questions involving CFTC powers, banking law, political ethics and tribal gaming require broader federal authority or additional legislation.

A delay would move the fight into a harder calendar

The Senate’s published calendar places lawmakers in a state work period from Aug. 10 through Sept. 11. Failure to act this week would not remove H.R. 3633 from the calendar, but it would push consideration into a period crowded by government funding, the November election and other unfinished legislation.

Hougan described that outcome as a “walking dead” period in which the bill remains alive without a clear route to passage. He suggested lawmakers could revisit it in September or attach provisions to a year end package. Those possibilities remain speculative because Senate leaders have announced neither a fall vote nor an omnibus strategy.

Polymarket traders currently give the CLARITY Act a 23% chance of becoming law by Dec. 31, down from 27% when Hougan published his memo. The market has attracted approximately $3.9 million in volume. Its price measures trader sentiment and is not an official congressional forecast.

A cloture filing on Aug. 5 would be the next concrete development. Without one, ordinary Senate procedure would leave almost no route to a pre recess vote. The industry could still receive narrower SEC rules, but the long term allocation of U.S. digital asset oversight would remain unsettled.

That’s because the ability to write messages is tied to a quirky Bitcoin feature called OP_RETURN, which lets anyone attach a small text string to a transaction. The text gets permanently timestamped into the blockchain alongside the transfer of money. The function exists for technical purposes; mainly, developers use it to timestamp documents or embed small proofs. That said, users can use the function to leave personal notes.

The Coldcard hardware wallet exploit, first detected on July 30, has snowballed into a major self-custody breach, with confirmed losses now topping $100 million.

What people are actually writing

The plea that opened this article isn’t the only one. Several similar messages have surfaced, according to on-chain tracker Arkham Intelligence.

One reads “Please Please Please” alongside an address; another bluntly asks for “80% of my 5 BTC” back. Whether these come from genuine hack victims or opportunists capitalizing on the sympathy wave is difficult to verify.

Other messages are opportunistic rather than sympathetic.

One reads, “I clean btc, do kyc and cashout. I take 10%,” complete with a Telegram handle — a laundering pitch hoping to land the hacker as a client. Another begs, “1 BTC for my Bitcoin journey,” which is entirely unrelated to the hack. The sender seems to be using the hacker wallet’s spotlight to solicit money from strangers.