Political Storm Rocks Crypto: Market Risks Spike as White House Turns on CLARITY Act
The crypto market is navigating a sudden political minefield. Significant new crypto market risks emerged over the weekend as the White House threatened to withdraw its support for the crucial CLARITY Act, throwing the landmark bill into chaos and triggering a broad market sell-off. Bitcoin retreated toward $93,000 and then it did get back to $95,000 , Ethereum dipped below $3,300, and total market capitalization slid to $3.22 trillion as uncertainty rattled investors.
The dramatic turn stems from a fierce backlash against Coinbase, which publicly withdrew its support for the bill’s current language. The White House labeled this a “rug pull” and expressed fury that one company would seemingly dictate terms for the entire industry. This political brinksmanship has stalled the bill’s progress, creating a vacuum of regulatory clarity that markets despise. The administration is now pushing for renewed negotiations to bridge the gap between crypto innovators and the traditional banking sector.
Analyzing the Root of the Crypto Market Risks
The core conflict is over stablecoin regulation. Coinbase argues the bill’s current draft would cripple the growing $308+ billion stablecoin industry by preventing exchanges from offering interest. Banks counter that this would trigger massive deposit outflows, harming their ability to lend. This stalemate has exposed a deep rift, even within crypto: while Coinbase opposes the bill, companies like Robinhood, Kraken, and Ripple Labs have expressed support, believing its passage is vital for long-term clarity.
Despite the panic, traders are cautiously optimistic. Prediction markets like Polymarket currently give the bill a 55% chance of passing, up from 40% earlier this month. The consensus is that this public clash is a painful but necessary negotiation tactic. The CLARITY Act remains the most significant piece of comprehensive crypto legislation since the 2025 stablecoin-focused GENIUS Act, making its fate a direct proxy for U.S. regulatory sentiment.
My Thoughts
This is high-stakes political theater, not a death knell for regulation. The sell-off is an emotional reaction to headlines, but the underlying truth is that both sides need a deal. The White House wants a legislative win; the industry needs certainty. This public friction likely pushes us toward a more compromised, passable bill. For investors, this volatility is a test of conviction. The long-term thesis—that crypto is moving from regulatory grey area to codified law—remains intact, even if the path is messier than hoped.
