Bitcoin has rebounded to the 81,000 USD level after plummeting due to the defeat of the U.S. Clarity Act (Virtual Asset Market Structuring Act) and a Federal Reserve interest rate hike. This recovery is attributed to improved investor sentiment as U.S. financial regulators accelerated their own regulatory adjustments following the legislative setback.
As of 2:49 p.m. (KST) on September 20, the global Bitcoin price stood at 80,475 USD, up 0.14% from the previous day, according to CoinMarketCap. The cryptocurrency, which traded around 75,000 USD last week, bounced back over the weekend to reclaim the 81,000 USD mark.
Bitcoin took a sharp dive on September 15 after the U.S. Senate rejected the procedural vote on the Clarity Act. Despite garnering 50 votes in favor and 49 against, the bill failed to secure the 60 votes required to advance.
The Clarity Act aimed to establish a comprehensive framework for regulating the U.S. virtual asset market, with a focus on delineating the supervisory powers of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
The bill’s failure prolonged regulatory uncertainties in the virtual asset industry. In the immediate aftermath of the vote, Bitcoin dropped nearly 4%, with other major cryptocurrencies like Ethereum and Ripple following suit. Shares of Coinbase, the largest U.S. cryptocurrency exchange, plummeted by over 10%.
The Federal Reserve’s interest rate hike further dampened investor sentiment. The day after the Clarity Act’s defeat, the Fed raised the benchmark rate by 0.25 percentage points and hinted at potential further tightening. This sparked concerns over liquidity reduction, suppressing investment appetite for risk assets like cryptocurrencies.
However, cryptocurrencies began to rebound over the weekend as U.S. financial authorities moved to fill the legislative void left by Congress. Although the bill failed, the SEC and CFTC’s efforts to establish regulatory standards using their existing powers have helped ease some market anxieties.
The CFTC submitted a new regulatory proposal to the White House aimed at governing virtual asset trading and markets. This proposal was reportedly received by the Office of Management and Budget (OMB) on September 17.
While specific details remain under wraps, the market took note of the CFTC’s swift action to utilize its rule-making powers immediately after the Clarity Act’s defeat. The White House review marks the initial step in the regulatory proposal process, with further public consultation expected before specific details are disclosed.
The SEC also granted a five-year conditional regulatory exemption for stock tokens, which allow trading of blockchain-divided shares. Qualifying trading platforms can operate stock token trading services without facing certain regulatory requirements, such as dealer registration.
Trading platforms must notify companies before listing their stock tokens, and listings cannot proceed if a company objects. This approach aims to facilitate the entry of blockchain-based securities trading into the regulatory framework while maintaining investor protections.
The SEC believes stock tokens will reduce trading costs and enhance liquidity and transparency, as blockchain technology enables round-the-clock, small-scale, real-time trading.
The influx of investment into Bitcoin spot exchange-traded funds (ETFs) has also bolstered the price surge. U.S. Bitcoin spot ETFs saw net inflows on September 17, attracting 433 million USD the following day, marking two consecutive trading days of positive fund flows.
Analysts suggest that institutional funds, which had previously exited due to regulatory uncertainties and monetary tightening concerns, are now returning, helping Bitcoin reclaim the 80,000 USD level.
Global investment bank JPMorgan noted that technically, the Clarity Act isn’t completely dead since the legislative session hasn’t concluded yet.
Tom Lee, chairman of Bitmain, stated that cryptocurrencies can still appreciate without the passage of the Clarity Act, adding that the CFTC and SEC will continue to fulfill their roles as regulatory agencies.