- CLARITY Act curbs deposit‑like returns but allows usage‑based incentives.
- Crypto rebounded on ETF inflows and corporate demand.
- DATCOs continue buying Bitcoin and Ether.
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US Senate advances the CLARITY Act
Digital Asset Market Clarity Act (CLARITY Act) has been pushed forward for a markup vote by the Senate Banking Committee. US senators Tillis and Alsobrooks have led changes to the bill’s wording to balance between permitting innovation and safeguarding deposits. It marks a constructive compromise for banks and crypto firms, barring deposit interest-like returns for stablecoins but allowing usage-driven incentives. This should alleviate concerns over deposit flight from banks, while allowing crypto firms room to incentivise customer usage of stablecoins for trading, transactions, or staking. Over the longer-term, this should facilitate a transformation of stablecoins into assets with productive use cases, supporting the value proposition of cryptocurrencies. Companies involved in the stablecoin ecosystem—both fintechs and traditional financial institutions alike—could benefit from increased issuance, custody, and transaction needs surrounding stablecoins.
Cryptocurrencies continued to rebound in April and early May, delivering returns comparable to equities. Bitcoin and Ether saw sequential monthly gains of 18% and 8% respectively since end March. Performance was broadly in line with the S&P 500 and Nasdaq, which rose around 10%-15% over the same period. In contrast, gold was largely flat.
Major cryptocurrencies saw strong ETF net inflow and Digital Asset Treasuries’ (DATCOs) purchases. Bitcoin benefited from robust demand, with ETF inflows reaching USD2bn alongside USD4bn of purchases by Strategy. Ethereum saw more modest ETF inflows of USD356mn and approximately USD760mn of purchases by Bitmine. However, the combined close to USD1bn in buying represents around 0.4% of Ethereum’s end Mar 26 market capitalisation, comparable to the USD6bn of notable purchases for Bitcoin, which also equates to roughly 0.45% of its end Mar 26 market capitalisation.
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