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- U.S. lawmakers are moving closer to passing the CLARITY Act crypto regulation bill.
- Bitcoin ETFs recorded $635 million in outflows after BTC fell below $80,000.
- Inflation fears and delayed Fed rate cuts continue pressuring institutional crypto demand.
The U.S. crypto market is entering a critical week as lawmakers move closer to passing long-awaited digital asset legislation while institutional investors pull hundreds of millions from Bitcoin ETFs during a sharp market downturn.
The two developments highlight the growing tension between regulatory progress and short-term market uncertainty across the crypto sector.
Senate Advances Landmark Crypto Bill
The Senate Banking Committee is preparing to vote on the CLARITY Act, a sweeping crypto market structure bill that could reshape how digital assets are regulated in the United States.
The legislation aims to settle one of the industry’s biggest disputes by defining which crypto assets fall under securities laws and which should be treated as commodities. The bill would also introduce compliance rules for exchanges, brokers, dealers, and stablecoin issuers while adding protections for self-custody and anti-money laundering standards.
The proposal has quickly gained support from major industry leaders. Brad Garlinghouse described the current moment as the closest the industry has ever come to achieving comprehensive regulation in Washington.
Garlinghouse said the political environment around crypto has improved significantly compared to previous years, especially after Ripple’s lengthy legal battle with the SEC helped expose regulatory uncertainty facing the industry.
Support has also emerged from figures including Brian Armstrong, David Sacks, Marc Andreessen, and Charles Hoskinson.
If the bill gains enough bipartisan support, President Donald Trump could potentially sign major crypto legislation before the end of summer.
Bitcoin ETFs See Biggest Exit Since February
While Washington moves toward clearer rules, institutional sentiment in the crypto market weakened sharply this week.
U.S. spot Bitcoin ETFs recorded roughly $635 million in net outflows after Bitcoin dropped below the key $80,000 level. The selloff marked the largest single-day withdrawal from Bitcoin ETFs since late January.
BlackRock’s IBIT fund accounted for nearly half of the outflows, losing approximately $285 million in one session.
The selling pressure intensified after fresh U.S. inflation data came in above expectations, increasing concerns that the Federal Reserve may delay interest rate cuts.
According to Glassnode data, ETF flow momentum has now turned negative for the first time in months. Analysts noted that institutions appeared to be selling during Bitcoin’s recovery rally near $80,000 rather than panic-selling during weaker conditions earlier this year.
Ethereum and XRP Funds Also Lose Momentum
The broader crypto ETF market also showed signs of slowing demand.
Ethereum ETFs posted another day of outflows, extending a three-session losing streak that has pushed total withdrawals close to $184 million. ETH prices also slipped alongside broader market weakness.
Meanwhile, XRP-related funds remained relatively stable despite limited activity in recent sessions. Earlier this week, XRP ETFs still managed to attract one of their strongest inflow days of 2026, suggesting investor interest has not completely disappeared.
The crypto industry now faces a defining moment where regulatory optimism is colliding with macroeconomic pressure.
Also Read: Bitcoin at Risk? CryptoQuant Warns of Major Bear Market Signal Returning
On one side, lawmakers appear closer than ever to establishing a clear legal framework for digital assets in the U.S. On the other, rising inflation and uncertainty around Federal Reserve policy continue to pressure institutional crypto demand.
Whether the CLARITY Act can restore long-term confidence may depend on both political momentum and broader market conditions in the months ahead.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
