Bitcoin Advances Amid Regulatory Uncertainty Over CLARITY Act

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Washington’s regulatory agenda took center stage this week as the Senate Banking Committee continued to refine the Digital Asset Market CLARITY Act.

This legislation is seen as vital for the stablecoin sector, having evolved from a narrow market-structure bill into a comprehensive framework addressing stablecoins, DeFi, consumer protection, and illicit finance.

A consistent theme across drafts is a regulatory focus on control and custody, where obligations are tied to who holds decision-making authority rather than a simple centralized versus decentralized label. This principle shapes the proposed rules for both DeFi and stablecoins, aiming to separate non-custodial software from financial intermediaries.

Despite this progress on paper, the immediate legislative path is unclear. A key committee markup scheduled for January 15 was postponed after strong industry criticism, including Coinbase’s CEO publicly withdrawing support over issues like tokenized equities and stablecoin yield.

While bipartisan talks continue, the current amendment under consideration would actually expand the bill’s scope into new areas like securities tokenization and DeFi cybersecurity. The committee’s decision to either advance this broader version or return to a more focused bill will heavily influence its chances of passing and its final impact on the crypto industry.

Macroeconomic data provided a mixed backdrop. Inflation figures met headline expectations but revealed persistent pressures in services and food costs. Bitcoin’s price initially rose on increased anticipation of a March interest rate cut, though stronger-than-expected retail sales and jobless claims data later dampened that optimism.

Overall market sentiment remains guarded, with significant selling from large holders still observable. However, a notable positive signal emerged in the form of $2.5 billion in weekly crypto inflows—the largest such figure since early October. We interpret this as a meaningful shift in sentiment as investors navigate the evolving landscape of macro and policy developments.