News
How Bad Is the CLARITY Failure, Really?
The most important crypto bill in a decade failed on Tuesday.
It needed 60, but only got 49 votes. It didn’t even clear a simple majority.
Every single Senate Democrat voted no. Even four Republicans voted against their own party’s bill. (One of them was a technical formality btw.) Worse, the reason for failure had nothing to do with crypto.
What happened? On September 15, the Senate rejected the cloture vote (a procedural hurdle to end debate and move to consideration) on the Clarity Act.
The market reacted a bit. BTC bottomed at $74,910, down 5.3% intraday. Coinbase fell 8%, Circle 10%. But Polymarket odds on CLARITY passing this year had already slid from 34% on Monday to 17% by Tuesday morning. So, the market knew this was coming.
Why did it fail?
Quick 80/20 on the Act: It gave the CFTC exclusive jurisdiction over spot markets in digital commodities. Left the SEC holding investment contract assets. Set a “mature blockchain system” test for when a token stops being a security. It ran 616 pages by the time the Senate finished merging it.
The crypto parts were basically finished. Section 604 shielded non-custodial developers from money transmitter rules. Section 404 banned yield on payment stablecoins. Many crypto natives were happy with the DeFi situation as well.
But one factor derailed everything: Trump.
His June financial disclosure showed $1.4B in crypto income for 2025. More than $500M from World Liberty Financial, the company he founded with his sons. Another $635M tied to the $TRUMP memecoin.
Democrats wanted to stop those activities and potentially punish republicans when they come back to power. Here’s the recap of the final 48 hours:
- Sunday. Republicans drop a revised text that includes permanent conflict-of-interest rules and letting state attorneys general sue officials who break them. Trump publicly backs it.
- Monday night. Democrats counter with three asks. Cover officials’ children. Make officials actually sell their crypto instead of parking it in a blind trust. Close the gap that left the President insulated from state AGs.
- Tuesday morning. Republicans reject the counter as “identical” to the last one. The vote fails a few hours later.
Crypto industry largely supported Trump in the last presidential election for a favorable regulatory environment. But he also grifted using memecoin. Now, it’s the ethics provisions that target Trump that are blocking the Clarity now.
To be fair, we did get some genuine wins: they dropped the unfair enforcement cases, killed SAB 121, and signed GENIUS into law.
What does this mean? Aka, Plan B.
In the short-term, this is NOT as bad as it may seem. SEC & CFTC can give guidance to companies.
Heads of both agencies even explicitly said that they’ll use their powers to provide clarity. The CFTC has staff drafting market structure rules under existing authority. SEC proposed Regulation Crypto Assets on August 18. Today, they even approved a temporary, conditional exemption to allow limited trading of tokenised stocks onchain! That’s a big win.
These Trump-appointed agencies might even be friendlier than the negotiated deal in the Clarity Act. But the problem with these agency approvals is that they’re not permanent. Those can be overturned any time.
Things the agencies can’t fix
The spot market gap. Under the Commodity Exchange Act, the CFTC’s power over spot commodities stops at fraud and manipulation. It can sue you for cheating. It cannot register, license, or supervise the exchanges themselves.
No rulemaking creates that authority. Only Congress does.
So the damage splits in two:
1. The securities side is fixable without Congress. Token launches, the Howey mess, tokenized equities. The SEC has room to move under existing law, and it’s already moving.
2. The spot side isn’t. Every US spot exchange stays exactly where it’s been for ten years, which is nowhere. Coinbase, Kraken, and anyone listing a token that isn’t obviously a security keep operating in a gray zone a friendly SEC chair can shrink but never close.
That’s the true cost for the industry.
Congress isn’t back until 2027
Tillis’s motion to reconsider keeps the bill technically breathing. With the midterm recess landing, that’s mostly paperwork.
The realistic next window is 2027. And details of 2027 Senate math will be decided in the coming November. I’ll wait for it to get more clarity on the topic.
Farms
Top Yield Farms Paying 7-11.5% on My Radar
US T-bills pay ~4%, virtually risk-free.
So before taking more risk in DeFi, I want to know who’s paying the extra yield and why.
3 opportunities paying 7% to 11.5% caught my attention.
Here’s how they work, what could go wrong, and how quickly you can get out:
#1. $sUSDai: ~7% net APY | Ethereum
Buy $USDai, stake it into $sUSDai, and hold it.
The yield is interest from people borrowing against GPU hardware, plus Treasury yield on reserves.
The dashboard currently shows around $585M in total deposits and 6.98% net APY.
You’re taking on exposure to those GPU-backed loans, so I’d want to understand what happens to my investment if borrowers stop paying.
Redemptions are queued and processed in fixed windows, described in the technical docs as, for example, 30 days. They also depend on sufficient liquidity being available.
I wouldn’t treat that as a guarantee that my money comes back within a month.
#2. Bitwise Premium RWA $AUSD Vault: ~8.9% APY | Ethereum
Deposit $AUSD into the Bitwise vault on Morpho. It lends it out across three markets backed by $PST, $sUSDai, and $PRIME.
Borrowers pay the lending interest, but that isn’t the entire headline yield.
The displayed 8.89% combines 5.18% vault yield with a separate 3.70% AUSD component. I’d check the terms of that extra yield rather than assume it lasts.
About $19M is deposited. Only $1.43M is currently liquid, and two of the lending markets are above 93% utilization.
That’s the number I’d stare at. If a lot of depositors want out at once, withdrawals can be delayed.
One more thing. One of those markets accepts sUSDai as collateral.
So if you also hold #1, you’re not as diversified as the two different product names might suggest.
#2. $ONyc: ~11.5% advertised APY | Solana
Buy $ONyc on Solana and hold it for exposure to reinsurance premiums and returns earned on the underlying collateral. OnRe advertises an estimated 11.54% APY.
This one’s the odd one out. Insurers pay to transfer some of their claims risk to someone else. With ONyc, you’re investing on the side that takes on that risk.
That means higher-than-expected claims can eat into returns. I’d want to understand the potential losses, not just the expected premiums.
I’d also check how much liquidity is available for redemptions and what happens when withdrawal requests exceed it.
And I’d leave leveraged versions alone. I don’t need borrowing costs and liquidation risk on top of the reinsurance exposure.
These yields are interesting, but I wouldn’t treat them as somewhere to park cash.
Before putting money in, I’d want to be comfortable with both the potential losses and the possibility of waiting longer than expected to get out.
🚀 DeFi Catalysts
Arc, the L1 chain from Circle, launched yesterday. While the TVL looks good, the overall reaction to the launch was poor across the crytpo twitter.
Avantis, the leveraged-trading protocol on Base, rebranded to Veranta and dropped its invite-code gate.
Renzo launched Renzo Basis, an automated delta-neutral basis trade on Hyperliquid supporting BTC and HYPE at launch.
Lido and Stakely opened a public ETH staking vault built on stVaults, pairing ETH staking with the EarnETH DeFi strategy.
Compound opened its Institutional Market for USDC borrowing, with LTVs up to 87% on ETH, 85% on wstETH, and 81% on wBTC and cbBTC.
Miden, the privacy-focused blockchain initially incubated by Polygon, shipped testnet v0.16, the last major release before mainnet.
Pump.fun replaced Cashback Mode with Holder Rewards. Holder Reward tokens now pay out just for holding, with higher ceilings the longer you hold.
Zama scaled up confidential DeFi with 16 yield vaults across five institutional curators, covering USDC, USDT, WBTC, AUSD, and tGBP, all deployed on Morpho.
Derive proposed V3, a zkVM exchange settling on Ethereum L1, with the matching engine and sequencer state transitions proved in a zkVM and user funds custodied in L1 contracts.
Base published the spec for Validity Transactions, which the chain includes only when onchain conditions match, gated on balance, storage, block number, or Flashblock index.
Pendle went live on Robinhood Chain with yield markets on tokenized stock dividends, starting with NVDA maturing October 15 and PFE maturing December 10.
MetaMask now auto-reverts a transaction when the real execution doesn’t match what the wallet simulated. It targets “red pill” attacks, where a contract behaves one way in simulation and another onchain.
Uniswap Labs shipped StablePair Hook, a v4 hook that sets LP fees based on how far a pool has drifted from its reference rate. It’s live on two Ethereum pools, USDC/USDT and USDC/USDG.
Aave proposed custodied collateral lending with Anchorage holding the collateral, letting institutions borrow stablecoins against Bitcoin that never leaves regulated custody.
Liquid Network‘s attackers returned 3.4k of the 4k BTC they took from the federation wallet, once Blockstream patched the affected bridge nodes.
🪂 Airdrop Alpha
Tydro, a white-label Aave v3 on Kraken’s Ink L2, opened season 2 of its points farm with boost multipliers that re-slice a fixed pool instead of growing it.
Variational‘s first Swaps competition closes September 24, paying $20,000 across the top 20 traders. Btw, you need ~$250k worth of notional trading volume to appear on the leaderboard as well.
Entropy‘s first $HYPE rebates are claimable on the referral page now. Btw, you still qualify if you traded through the Hyperliquid frontend instead, as long as you once connected your wallet to Entropy and created an account.
📰 Industry News
Coinbase dropped the Base App name and went back to Coinbase Wallet. They’re repositioning themselves as a multi-chain app.
MetaMask is becoming its own company. Consensys is separating its consumer and institutional arms by the end of 2026, with Mike Kriak running the new Consensys and Lubin taking MetaMask.
Nasdaq is putting $100 million into Payward, Kraken’s parent, at a $21 billion valuation. The money comes from Nasdaq Ventures and extends a tokenized-equity partnership that started.
India‘s securities regulator and central bank are piloting tokenized corporate bonds that settle atomically against the RBI’s wholesale digital rupee. The target is a $620 billion corporate debt market.
Canada‘s banking regulator confirmed that tokenized deposits are legally no different from traditional bank deposits. Federally regulated banks can build on blockchain without waiting for a new regulatory category.
🚨 Rekt Report
Yam Finance was drained of about $121K after an attacker self-delegated enough YAM to pass proposal #45 and seize the Timelock.
Ether.fi lost ~15.45 ETH to a missing access-control check in AtomicQueue. SlowMist disclosed it to the team privately before going public.
ChainFlip lost ~736k USDT on Tron after an attacker attached their own memo to transactions validators had already signed.
Nomic‘s transaction-forwarding flaw let an attacker double-spend nBTC, minting 40.65 nBTC with nothing behind it back in June. Nobody noticed for 74 days.
Trezor‘s third-party email provider Brevo was breached and used to send phishing mail from Trezor’s own domain. Roughly 347k addresses got it, and 2.5k clicked before the domain came down.
A Safe on Ethereum lost ~$7.73M in rsETH when an attacker used a public keeper multicall to push its Uniswap V4 LP module into a malicious hooked pool that unwrapped aETHrsETH. An MEV bot then front-ran the attacker and took the funds in the same block.
📉 Down Bad
SparkLend deprecated its Gnosis Chain instance on September 14. Every outstanding loan there becomes liquidatable the moment the spell executes.
Edgeless Network‘s abandoned L2 bridge received a fake rollup assertion against the ~9.2 ewETH, about $22.7K, still sitting in the L1 bridge.
Balancer proposed an orderly wind-down: no new business, pausable pools to withdrawals-only on October 30, and at least $9M of treasury distributed to BAL holders who burn their tokens. Snapshot runs September 25 to 29.
Wyoming pulled its FRNT stablecoin off LayerZero and moved it to Chainlink CCIP, citing a “repeated pattern of major operational security failures,” including loss of control of a private key managing the live FRNT deployment. LayerZero’s CEO disputes it, saying the authority involved was view-only metadata.
🐦⬛ X Hits
- 15 pointers for crypto security.
- ARC Tools for onchain degens.
- Crypto trading as a video game.
- Finance is entering its Legora moment
- Why crypto businesses all look the same now
😂 Meme
Until next time,
Edgy
Today’s email was written by Edgy and Yayya.
DISCLAIMER: I’m NOT a financial advisor. This content is for education and information purposes only. Crypto and DeFi are risky and speculative. Please do your research before investing.
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