Bitwise Chief Investment Officer Matt Hougan says the SEC is ready to step in with rule-making if the CLARITY Act misses Friday’s deadline, arguing crypto will march ahead either way.

What Happens If Clarity Fails This Week?

Hougan wrote in a Bitwise note on Tuesday that the bill will not truly die if it misses the August 7 recess deadline.

Instead it enters what he calls a “walking dead” state, with ongoing chatter about reviving it in September or bundling it into a year-end omnibus package in December.

He said prolonged uncertainty is worse for markets than a clean failure, since professional investors are sitting on the sidelines waiting for resolution.

“The best thing that can happen if Clarity doesn’t pass this week is that the Polymarket odds break solidly lower, into the teens at least, so we can put the uncertainty behind us,” Hougan wrote.

Meanwhile, Polymarket currently puts passage odds at 27%, down from 82% in February.

Why The SEC Is The Real Backstop?

Hougan pointed to SEC Chair Paul Atkins, who told CNBC the agency is “ready, willing, and able to come out with rules that address the same issues as Clarity.”

Hougan said rulemaking under Atkins could actually be more crypto-friendly than a bipartisan bill and may even accelerate progress in the near term.

The risk is a future administration installing a less friendly SEC chair.

But Hougan argued the industry has at least two and a half years of the current regulatory environment to entrench itself deeply enough that no future chair can reverse it.

Why Hougan Says The Genie Is Already Out Of The Bottle?

Hougan pointed to the pace of institutional adoption as the reason no future regulator can reverse crypto’s progress. 

BlackRock’s (NYSE:BLK) most profitable ETF is now a Bitcoin (CRYPTO: BTC) ETF. Nasdaq and JPMorgan (NYSE:JPM) are tokenizing assets aggressively. 

Meanwhile, Visa (NYSE:V), Mastercard (NYSE:MA), and Stripe are building a stablecoin platform with Coinbase (NASDAQ:COIN) while Robinhood Markets (NASDAQ:HOOD) launched its own blockchain integrating with DeFi apps. 

Moreover, the OCC has granted trust charters to Circle (NYSE:CRCL), Ripple (CRYPTO: XRP), and Paxos.

To make his point, Hougan drew a parallel to 1994, when sweeping telecom reform passed the House 423-4 before dying in the Senate without a floor vote. The internet did not wait.

Netscape launched, Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY) opened for business, and Congress eventually passed the Telecommunications Act of 1996 by a 91-5 margin in the same chamber that could not act two years earlier. The delay barely mattered.

“Washington is dysfunctional,” Hougan wrote. “But it’s not a referendum on crypto’s validity as a pillar of the global financial infrastructure. That ship has long since sailed,” he added.

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