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Here’s what I’ll cover today:
🔎The Clarity Act: How it could impact crypto
📊 Crypto chart of the week
🗞️ The latest DeFi news
🔎 The Clarity Act: How it could impact crypto
The US Senate has 25 days left to pass the Clarity Act, the most important piece of crypto legislation in US history, before senators leave for the summer recess.
With this deadline rapidly approaching, I thought now would be a good time to discuss what the Clarity Act could change and why it’s such a big deal.
Because if it passes, it could have a massive positive impact on crypto.
As the name suggests, the Clarity Act can finally bring some much-needed clarity by establishing the first comprehensive US regulatory framework for crypto.
Much of the crypto industry still operates in a legal gray area.
And while I am not a fan of overregulation, the reality is that without clear rules, launching crypto products in the US has become a legal minefield.
Among the biggest changes that the Clarity Act proposes are the following:
Establish who regulates what
The Clarity Act establishes that sufficiently decentralized assets should be regulated by the CFTC as digital commodities, while the more centralized ones should be regulated by the SEC as crypto securities.
This matters a lot because the two regulators follow very different rulebooks.
For years, many crypto startups avoided launching in the US, unsure whether their tokens would be treated as securities or commodities and fearing potential lawsuits from the SEC amid regulatory uncertainty.
What the Clarity Act does is give projects a clear path to compliance and clarify how they can operate in the US legally.
This is also expected to make token launches in the US much easier.
Introduce investor protection requirements for CEXs
The goal of the protection requirements is to prevent another FTX-like event.
This includes asset segregation (CEXs must segregate customer funds from their operational capital), anti-insider trading measures, and more.
Personally, I mostly use DEXs nowadays and prefer to keep my funds in a self-custody wallet. But for normies entering the space via CEXs, I think this is a great change.
Truly decentralized DeFi receives explicit protections
This is the most interesting part to me.
In 2024, for example, the SEC accused Uniswap of running an unregistered securities exchange, and Uniswap spent tens of millions of dollars in legal fees to defend itself.
The Clarity Act could prevent this from happening again by distinguishing between centralized intermediaries and truly decentralized protocols. If a protocol doesn’t custody user funds, it may not be regulated like a broker or a centralized company.
This is a big deal because it introduces protections for DeFi software developers and could encourage more people to start building DeFi products in the US.
It also incentivizes existing projects to become truly decentralized if they want to benefit from a more favorable regulatory framework.
So it’s a win-win from any point of view.
What are the odds that the Clarity Act passes?
According to Polymarket, there’s a 41% chance it will get signed into law.
Realistically, there are only 25 days left to pass it, because as I mentioned at the beginning, the US Senate will go into summer recess on Aug. 10.
If it doesn’t pass by then, it could theoretically also pass later in September, but the chances of this happening are low, as Congress has a packed agenda after recess and the upcoming US midterm elections will become the main focus.
So the next 21 days will likely be decisive for the US Clarity Act.
Regulatory uncertainty has arguably been one of crypto’s biggest obstacles. If the Clarity Act passes, that could finally begin to change.
It will likely not trigger an immediate massive market rally or a new bull run.
But in the long run, clear regulations could attract a lot of new capital to the industry, accelerate institutional adoption, and trigger a new wave of innovation.
Together with Ondo Finance
The most rewarding place to trade equity perps
Just recently, Ondo has released Ondo Perps - the first perpetuals exchange purpose-built for tokenized equities, indices, and commodities.
It offers up to 20x leverage and access to dozens of equity markets.
As institutional market makers use it to deliver tight spreads, Ondo Perps is able to offer very deep liquidity, even for large positions.
What’s also interesting is that it has some very attractive incentives:
$3 million in total rewards - Every week, over $100,000 in USDC incentives from this pool are distributed to active traders
Ondo Points - While there aren’t many details about Ondo’s points program yet, the Ondo team confirmed that points are already accruing for trading activity
By trading equity perps on Ondo Perps, you can farm two types of rewards at once.
Another thing that grabbed my attention is that you can use tokenized stocks as collateral. (currently available only for Pre-alpha users)
So if you are, for example, bullish on AAPL and bearish on TSLA, you could buy AAPL tokenized stocks and use them as collateral to short TSLA.
This gives traders a new level of capital efficiency that’s hard to get elsewhere.
Chart of the week
Tokenized stocks trading volume skyrocketed in June
Crypto meme of the week😂
The latest developments in DeFi
Aave V4 went live on Avalanche with an incentive program
Pendle launched automated PT looping
Ondo released 24/7 trading for tokenized stocks on Solana
Lighter burned $36M worth of LIT tokens
Curve Finance released Llamalend v2 on Ethereum
Cap was caught giving most of its airdrop to its own founder
Quai launched Quainance - an all-in-one DeFi platform on Quai
Hyperliquid Policy Center team met with the SEC to address crypto regulation
Plasma One, an on-chain neobank, went live on Android
Chainlink CCIP was adopted by Aave as the cross-chain infrastructure solution for its upcoming mobile app
Jito released JTX - a new DEX for trading crypto and equities on Solana
EthSystems launched privacy tools for institutions that want to use Ethereum
Polymarket applied for a US License to offer margin trading
Arbitrum announced that 10% of Robinhood Chain’s fees go to its own treasury
Ostium was unfortunately exploited for over $23 million
That’s all for this week!
Until next time,
The DeFi Investor
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