Crypto’s Capitol Hill Crisis: How the ‘Shadow Deposit’ War Held the CLARITY Act

The crypto market is entering a critical phase as persistent selling pressure and growing fear continue to dominate sentiment across digital assets. Price action has been volatile in recent weeks, with both major cryptocurrencies and altcoins struggling to regain momentum. Investors are becoming increasingly cautious as liquidity tightens, volatility continues, and greater uncertainty dampens appetite. While correction phases are not uncommon after strong rallies, the current environment suggests that the market is still looking to stabilize rather than transition into a clear recovery.

CryptoQuant’s latest report highlights key regulatory developments that could impact the long-term market structure. Ripple CEO Brad Garlinghouse recently revealed that there is about a 90% chance that the CLARITY Act will pass by the end of April. The Digital Asset Market Transparency Act aims to define the regulatory boundary between the SEC and CFTC, establish clear registration frameworks for exchanges and brokers, formalize custody and asset segregation rules, and consolidate AML and KYC requirements.

Progress has slowed down mainly due to the debate about stablecoin yield products. While some proposals prohibit issuers from paying interest, banks argue that transaction-based rewards can serve as indirect productivity tools. Meanwhile, on-chain data shows the stablecoin’s yield-generating supply growing rapidly from late 2024, highlighting the growing demand for the structure.

Regulatory developments are increasingly shaping sentiment across the crypto market, and recent analysis suggests that the rapid growth of yield-generating stablecoins has intensified political and financial tensions. Crypto firms try to make a distinction between interest paid directly by issuers and rewards distributed through exchanges or platforms, arguing that these methods perform different economic functions.

Traditional banks, however, advocate stricter restrictions, worried that such products could accelerate the outflow of deposits from the mainstream financial system. Until the waiver language is formally incorporated into legislation, the momentum within the Senate remains uncertain.

At the same time, legal complexity continues to increase. The Senate Agriculture Committee has developed a separate document that focuses more on oversight of the Commodity Futures Trading Commission. This creates a situation where multiple legislative packages will eventually need to be harmonized. Bipartisan vote requirements, questions about federal and state regulatory authority, and unresolved provisions related to decentralized funds continue to complicate the timeline. These factors suggest that even widely supported structures may experience procedural delays.

If enacted, the Digital Asset Market Transparency Act could reduce regulatory risk premiums in the short term while gradually reshaping market structure in the long term. However, clarity is unlikely to emerge quickly. Historically, regulatory changes occur sequentially – first through political signature, then formal regulation, and finally enforcement. Until that process matures, regulatory uncertainty will remain entrenched in the marketplace.

Total Support Crypto Market Cap Structure Analysis

The total amount of the cryptocurrency market continues to face downward pressure, with the weekly chart showing a clear rejection from the trillion-dollar collection reached during the 2025 meeting. After rising close to the region of $ 4 trillion, the market has entered a continuous phase of correction, recently retreating towards the region of $ 2.3 trillion. This area now serves as the main support level of the structure, marking the middle ground between the previous phase of expansion and the ongoing consolidation.

Technically, price action remains below short-term moving averages, which have started to decline and act as resistance to volatility. The medium-term moving average is flat, suggesting a loss of bullish momentum, while the long-term trend line remains up but has the usual range of major support indicators. Until the caps re-claim these levels with confidence, the upside may remain limited.

Volume patterns also indicate caution. Participation is limited compared to the general meeting stage, although occasional spikes suggest a re-establishment in the middle rather than the same expression. Historically, such areas often precede extended consolidation periods as the bulk of energy declines.

If support exists near current levels, the market may enter a stabilization phase. The underlying isolation of this area, however, would ensure continued pressure to adjust throughout the crypto ecosystem.

Featured image from ChatGPT, chart from TradingView.com

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