Will Bitcoin Volatility Calm If the Clarity Act Passes?

▲ U.S. Congress, Bitcoin/ChatGPT-generated image ©

The U.S. Treasury Secretary publicly stated that the passage of the “CLARITY Act,” a U.S. cryptocurrency market structure bill, could stabilize the recently plummeting Bitcoin (BTC) market, bringing regulatory uncertainty back into focus as a key market variable.

According to crypto media outlet Decrypt on February 13 (local time), U.S. Treasury Secretary Scott Bessent said in an interview with CNBC that if the CLARITY Act passes Congress, it would “provide great relief to the market,” adding that “the bill should be on the President’s desk this spring.” Referring to recent market volatility, he emphasized that clarity around the legislation would help restore investor confidence.

Regarding Bitcoin’s more than 29% decline over the past month, Bessent said part of it was “self-induced.” He noted that while some Democrats are attempting to work with Republicans to advance the market structure bill, several cryptocurrency companies are opposing the current wording of the legislation and obstructing its progress. In particular, he mentioned that Coinbase withdrew its support due to provisions restricting the offering of yield on stablecoins.

Coinbase CEO Brian Armstrong previously stated, “It’s better to have no bill than a bad bill.” In response, Bessent reportedly described such companies as “nihilists” during a recent hearing and sharply criticized them, saying that “market participants who don’t want regulation should move to El Salvador.” In the TV interview, he also referred to them as “recalcitrant actors.”

The political landscape remains another variable. Bessent warned that if the House majority shifts to the Democrats after this year’s midterm elections, “the possibility of agreement could collapse.” He evaluated the Democratic Party’s crypto policies during the Biden administration as being “close to an extinction event for the industry.” Meanwhile, decentralized prediction market Polymarket reflects approximately a 62% probability that the CLARITY Act will be signed into law by the end of 2026.

Ultimately, these remarks highlight that the regulatory framework—more than price itself—is guiding market sentiment and capital flows. With Bitcoin and Ethereum having retreated significantly from their all-time highs, legislative progress is increasingly likely to become a key catalyst determining the direction of future volatility.

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