The House of Representatives passed the Digital Asset Market CLARITY Act with a vote of 294–134, with support from 78 Democrats. This bill is the first major effort to regulate the cryptocurrency industry. It sets clear roles for regulators like the SEC and CFTC while creating a new category for registered digital assets. This aims to better connect crypto with traditional finance. Even with strong bipartisan support, the bill’s future in the Senate is unclear. Senators are currently drafting their version and are likely to make changes. Some Senate Democrats want the bill to address President Trump and his family’s cryptocurrency holdings. The CLARITY Act follows last year’s failed Senate effort with the FIT21 measure, which received wide Democratic support in the House. It is part of the House GOP’s larger “Crypto Week” package, which includes two other key digital asset bills aimed at updating regulations for blockchain and digital finance. We believe that the House’s approval of this bill will create significant volatility in the digital asset market in the coming weeks. The bill’s uncertain future can lead to price swings that derivative traders might find profitable. We have already seen a direct impact on the derivatives market, with the Bitcoin Volatility Index (DVOL) rising over 15% to above 60 around the time of the vote. Now, our attention is on the Senate, where the bill’s path is very uncertain and could change significantly. This legislative delay suggests traders prepare for large price swings in either direction soon. They might look at strategies that benefit from volatility, regardless of which way prices move. In the past, positive regulatory news has often triggered strong price increases, like the approval of spot Bitcoin ETFs in January, which led to a price jump of more than 50% in two months. If a similar bill passes in the Senate, we could see a similar reaction in the market, especially as institutional investors find a clearer path to enter. This indicates that holding long-dated call options might be a smart way to take advantage of the potential upside. The involvement of a former president’s cryptocurrency portfolio, valued at over $7 million according to blockchain data, adds a layer of political risk that could complicate the process. This uncertainty makes it sensible to hold protective puts as a safeguard against a possible market downturn if the bill stalls. It serves as a reminder that political news will significantly affect short-term price movements.

here to set up a live account on VT Markets now