Clarity Act Seen as Key to Soothing Crypto Jitters, Says Treasury Secretary Bessent
The sharp reversal in crypto markets has rattled both retail traders and institutional investors, with Bitcoin and Ethereum sliding far below the record highs they reached last year. Against that backdrop, U.S. Treasury Secretary Scott Bessent argues that the fastest way to restore confidence is not another emergency policy move or market intervention, but clear, durable regulation.
Bessent said that passing the Clarity Act — a proposed crypto market structure bill — would significantly reduce uncertainty surrounding digital assets and help stabilize prices.
“Some clarity on the Clarity bill would give great comfort to the market,” Bessent told CNBC in an interview on Friday, stressing that lawmakers should prioritize the legislation and aim to deliver it to the president’s desk this spring.
Bitcoin’s Slide and “Self‑Induced” Stress
Over the past month, Bitcoin has dropped more than 29%, dragging much of the broader crypto market down with it. Ethereum and other major tokens have followed the same path, snapping a period of relative calm and renewed bullishness that had built up after last year’s highs.
Bessent described part of this turbulence as “self‑induced,” alluding to risks and behaviors that are intrinsic to the crypto ecosystem: speculative leverage, fragmented regulation, and uncertainty over how existing financial rules apply to tokens, platforms, and intermediaries. In his view, the lack of a coherent, unified framework for digital assets in the U.S. has amplified volatility and kept institutional capital on the sidelines.
Without clear guardrails, large players are forced to guess how regulators will treat different categories of assets, or how enforcement might evolve. That guesswork, Bessent suggested, is now being priced into markets in the form of elevated risk premiums and violent price swings.
Why the Clarity Act Matters for Crypto Markets
The Clarity Act, often referred to as a crypto market structure bill, is designed to answer a fundamental question that has dogged the industry for years: which digital assets should be regulated like securities, and which should be treated more like commodities or other financial products?
By establishing consistent definitions and outlining which agencies oversee which activities, the bill aims to:
– Clarify the regulatory status of major cryptocurrencies and tokens
– Define responsibilities for key regulators such as the SEC and CFTC
– Create a more predictable regime for exchanges, brokers, and custodians
– Provide pathways for compliant token issuance and trading
For markets, predictability is often as important as the rules themselves. If investors can understand, model, and plan around a regulatory environment, they are more willing to deploy long‑term capital. Bessent’s argument is that the Clarity Act would replace today’s patchwork of guidance, enforcement actions, and court decisions with a single framework — reducing the “unknowns” that now weigh on sentiment.
A Bipartisan Window for Reform
Bessent also noted that there is a faction within the Democratic Party that is willing to work with Republicans on crypto legislation. While political divisions around digital assets remain, especially on issues like consumer protection, stablecoins, and the role of banks, this emerging cross‑party bloc sees value in finally resolving the regulatory limbo.
The Treasury Secretary’s comments suggest that crypto is increasingly being treated as a mainstream financial issue rather than a niche or speculative side topic. As more American investors hold digital assets, and as more companies integrate blockchain‑based services, the cost of regulatory ambiguity grows — not only for exchanges and token projects, but for the financial system more broadly.
This evolving political coalition is crucial: without some degree of bipartisanship, complex, forward‑looking financial legislation rarely makes it to the president’s desk, let alone on the fast timeline Bessent is calling for.
How Regulatory Clarity Could “Comfort” Markets
From a market perspective, Bessent’s use of the word “comfort” is telling. He is not promising a price rebound or a new bull run. Instead, he is pointing to a reduction in perceived risk and a normalization of trading conditions.
Regulatory clarity could ease market stress in several ways:
1. Lower Uncertainty Premiums
When investors no longer fear a sudden reclassification of assets, surprise enforcement actions, or retroactive interpretations of the law, they demand a smaller risk premium. That can translate into more stable valuations and less extreme sell‑offs.
2. Greater Institutional Participation
Pension funds, insurers, and traditional asset managers typically require robust compliance frameworks before entering a new asset class at scale. A clear market structure bill would simplify their due diligence and open the door to more orderly, long‑term investment rather than short‑term speculation.
3. Improved Liquidity and Price Discovery
With better‑defined rules, more venues can operate confidently, and more market‑making firms can participate without fear of regulatory whiplash. Deeper order books and tighter spreads tend to dampen volatility, especially during times of stress.
4. Stronger Consumer Protections
A comprehensive framework can mandate disclosures, custody standards, and conflict‑of‑interest rules that help protect individual investors. When retail participants feel less exposed to opaque practices, their behavior may become less panic‑driven.
Volatility Isn’t Going Away — But It Can Be Managed
Even if the Clarity Act passes, crypto will remain a high‑beta, sentiment‑driven asset class. Its prices are influenced by macroeconomic conditions, interest rates, technology narratives, and global risk appetite. Regulatory reform cannot eliminate those forces.
What it can do, however, is distinguish “natural” market volatility from avoidable, policy‑driven uncertainty. Bessent’s comments imply that today’s swings reflect not only changing expectations about Bitcoin’s intrinsic value, but also fear about what U.S. authorities might do next.
By locking in clear rules, lawmakers would remove one of the key destabilizing variables. That, in turn, could make it easier for investors to focus on fundamentals: adoption trends, network activity, innovation in layer‑2 and scaling technologies, and the evolving role of cryptocurrencies in payments and savings.
The Timetable: Why Spring Matters
Bessent emphasized the need to move quickly, urging Congress to finish the Clarity Act and send it to the president “as soon as possible” and ideally by spring. That timeline is significant for several reasons:
– Market Psychology: Crypto markets are highly sensitive to narrative shifts. A credible, near‑term path to regulatory clarity could itself become a stabilizing story, even before the law takes effect.
– Election Dynamics: As the U.S. heads deeper into an election cycle, major financial legislation becomes harder to push through. Early action may be essential to avoid the bill getting caught in campaign rhetoric or partisan gridlock.
– Global Competition: Other jurisdictions are moving ahead with their own digital asset frameworks. Delays in the U.S. could push innovation and liquidity offshore, a risk policymakers are increasingly aware of.
The urgency in Bessent’s tone reflects a recognition that markets do not wait indefinitely for Washington to make up its mind.
What Investors Should Be Watching
For traders and long‑term holders alike, the Clarity Act represents more than just another piece of legislation. It is a signal about how deeply the U.S. intends to integrate digital assets into its financial system and under what conditions.
Key points to monitor include:
– How the bill defines different classes of tokens
– Which agencies receive primary oversight over spot markets and derivatives
– The treatment of stablecoins, DeFi protocols, and staking services
– Transition timelines for compliance and registration
Each of these elements can influence valuations, business models, and the relative attractiveness of U.S. venues compared to overseas alternatives.
From Experiment to Infrastructure
Underlying Bessent’s remarks is a broader shift in how policymakers view crypto. What started as a fringe experiment has grown into a parallel financial ecosystem with trillions in historical market value, billions in daily trading volume, and direct ties to mainstream institutions.
With that growth comes systemic relevance — and with relevance comes the need for a sturdy legal architecture. The Clarity Act, in Bessent’s framing, is not about endorsing or rejecting digital assets. It is about accepting that they are here, and that the only sustainable path forward is to regulate them in a transparent, technologically informed way.
As Bitcoin and Ethereum continue to trade far below last year’s peaks and volatility remains elevated, the passage of a comprehensive crypto market structure bill could mark a turning point: not necessarily in price, but in the maturity and stability of the ecosystem itself.