Weekly Top Stories - 05/15/26

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In this week's edition, Alex Thorn assess the Clarity Act's prospects following Thursday's markup; Lucas Tcheyan unpacks Coinbase's deal cementing USDC's status as Hyperliquid’s native stablecoin; and Thad Pinakiewicz considers the market implications of unexpectedly high inflation numbers.

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Market Update

The total crypto market cap stands at $2.75tn, essentially flat from last week. Bitcoin's network value is 4.94% of gold's market cap. Over the last seven days, BTC is up 0.47%, ETH is down 1.37%, and SOL is up 2.75%. Bitcoin dominance is 58.69%, down 1 basis point from last week.

CLARITY Act Clears Senate Banking Panel on Bipartisan Vote

The Senate Banking Committee voted 15-9 Thursday to advance the CLARITY Act out of committee, paving the way for an eventual floor vote on the landmark digital assets market structure legislation.

Around noon, 90 minutes into the markup, Sen. Ruben Gallego (D-AZ) indicated that he would vote YES to advance the bill out of committee, though clarifying that a committee "yes" vote did not necessarily mean he’d eventually vote for the bill on the Senate floor. That statement from Gallego appeared to be the result of extremely late-stage negotiations (during the hearing itself) between the sides.

A few minutes after Gallego signaled support, Committee Chairman Sen. Tim Scott (R-SC) announced that a bipartisan compromise had been reached and that he wanted five additional amendments from Sen. Cynthia Lummis (R-WY) added for committee consideration. All those Lummis amendments, which comprised that compromise, passed, most with five key Democrats joining to vote in favor (Warner, Warnock, Alsobrooks, Gallego, Cortez Masto). On the final vote, though, only Sen. Angela Alsobrooks (D-MD) joined Gallego to vote yes and advance the bill out of committee, and both Democrats caveated that they are not guaranteed “yes” votes on the floor.

Up next: the Senate Banking text must be reconciled and combined with the Senate Agriculture version that advanced through that committee in January. After that, Majority Leader Sen. John Thune (R-SD) needs to schedule floor time for full Senate debate on the bill. Debating CLARITY will likely take a full week of Senate floor time, and Thune probably needs to put it on the floor by July 13 to allow enough time to pass, reconcile with the House version, and send to the President’s desk for signature.

Our Take

This was a big win for the CLARITY Act and its ultimate prospects in the Senate. Although only two of the five “pro-crypto” Democrats voted yes, many in the crypto policy ecosystem had resigned themselves to a purely partisan outcome in the 24 hours leading into the committee markup. Indeed, the deal that brought Gallego and Alsobrooks into the "yes" camp came together during the committee meeting itself and was, frankly, the closest to “fireworks” that a Senate committee markup can have. Gallego and Alsobrooks deserve a lot of credit for breaking ranks and advancing the bill. That they did make the markup bipartisan is a signal that the bill may have enough Democratic support to reach the 60-vote threshold needed to overcome the filibuster when the full Senate debates the bill.

Advancing crypto market structure legislation has been a multi-year effort. Senators Lummis and Gilibrand have worked on this together in a bipartisan manner for four years. Legions of staffers on both sides of the aisle have spent thousands of hours negotiating language. Policy teams from crypto firms, including Galaxy, have submitted countless suggestions, ideas, and technical assistance to language drafting.

Despite the good news and bipartisan showing in the Senate Banking Committee, there is still a lot of work to be done. Both Gallego and Alsobrooks emphasized that more changes need to be made before they commit to voting yes on the floor. The most important issue to resolve and secure Democratic votes is “ethics.” Democrats are seeking provisions barring senior government officials, elected officials, and perhaps their family members from some combination of holding financial interests in, profiting from, endorsing, or promoting digital assets. It’s likely that the contours of such an amendment have been agreed upon by Gallego, Alsobrooks, Gilibrand, Lummis, and Moreno. Gallego and Alsobrooks probably wouldn’t have voted yes in the committee if there weren’t a handshake agreement that a bipartisan amendment on ethics would be offered during a future floor debate.

Other issues that may see further bipartisan movement include handling of DeFi (Title III) and the Blockchain Regulatory Certainty Act (BRCA, Sec. 604), both of which are concerns for law enforcement hawks. (We wrote at length about these issues in our April 22 report). Our guess, though, is that a deal on ethics would advance the bill with or without further changes to Title III or BRCA.

Timing is tight. There are nine weeks of Senate floor time between now and the August recess that begins Aug. 10. Historically, very little substantive legislation moves in Congress after the August recess in a midterm election year. A plausible timeline might look like this:

• Week of June 1: Banking and Agriculture reconciliation begins, completed the following week

• Week of June 15: Senate floor consideration begins

• Week of June 22: Senate final passage

• Week of July 13: Senate-House process

• Week of July 20 or Week of July 27: House final passage of reconciled version

• Week of Aug. 3: President signs CLARITY into law

The CLARITY Act is landmark legislation that, when combined with last year’s GENIUS Act, will set the stage for major capital markets innovations and powerful investor protection. The bills are reminiscent of the Securities Act of 1933 and Exchange Act of 1934, which together laid the foundation for 100 years of U.S. capital markets dominance. There are important provisions in this bill that would protect investors and allow innovation to flourish in America – in our markets, in our legal system, under our rules – rather than abroad.

More work needs to be done, but the bipartisan advancement through committee was a major milestone that raises the odds of final passage. In our view, the bill now has a 75% chance of becoming law in 2026. – Alex Thorn

USDC Secures Hyperliquid Crown

Coinbase is effectively buying out and phasing out Hyperliquid’s homegrown stablecoin, USDH, cementing USDC, the stablecoin the U.S. crypto giant co-created with Circle, as the decentralized trading platform’s official stablecoin in a deal announced Thursday.

Alongside the deal, Hyperliquid unveiled a new Aligned Quote Asset v2 framework (AQAv2). AQAv2 is an upgrade to Hyperliquid's stablecoin alignment spec. It lets non-exclusive stablecoins serve as the quote asset for HIP-4 outcome markets and validator-operated perpetual futures in exchange for staking 500,000 HYPE tokens and sharing reserve yield with the protocol. Coinbase becomes the USDC treasury deployer, sharing at least 90% of reserve yield with Hyperliquid, while Circle is the technical deployer, handling mint, redemption, and Cross-Chain Transfer Protocol (CCTP) infrastructure. Circle staked 500,000 HYPE and Coinbase staked beyond the threshold to activate AQAv2. USDC will serve as the canonical quote asset for HIP-4 outcome markets and remain primary collateral for trades on HIP-1, HIP-2, and HIP-3.

Hyperliquid validators picked Native Markets to issue USDH in September 2025 over Paxos, Ethena, Frax, Sky, and Agora, despite a less generous 50/50 reserve-yield split. However, USDH’s growth was tepid, stalling near $100m while USDC on Hyperliquid stands at $5b. AQAv2 attaches USDH's yield-sharing mechanic directly to USDC, and the Hyper Foundation will fund migration grants for affected HIP-3, HIP-1, and USDH-integrated builders.

Our Take

The most direct and immediate impact is the shift in Hyperliquid’s already favorable economics. Hyperliquid generated $192 million in revenue in Q1, on track to make $760 million in 2026. Under the new agreement, it will see another $160 million or more added to that revenue stream, a nearly 20% bump in exchange for basically nothing. This is a material bump from the $3 million plus Hyperliquid stood to make from the $100 million of USDH supply. Beyond the economics, there's a product win too. USDH carried natural UX friction for market makers and users that was slowing the scaling velocity of HIP-4 trading pairs. Hyperliquid now gets an aligned quote asset without fragmenting the product.

For Coinbase (which already receives 50% of interest income earned on USDC and 100% of income on USDC on Coinbase) the motivation behind the deal is less clear. USDC was already the dominant stablecoin on Hyperliquid. While HIP-4 introduced the first real challenge to that status, by making USDH the default quote pair, it still presented little risk to USDC’s status on the highest volume markets. Acquiring USDH and getting USDC named the canonical HIP-4 quote asset locks in incumbency at the exact moment it was most contestable. That may have been the impetus for Coinbase to come to the table (Hyperliquid also hired Circle’s former onchain lead a few months back…).

The deal has implications for Coinbase's product strategy. Base, the U.S. company’s layer-2 network running on top of Ethereum, has not become a meaningful venue for perps or derivatives. Instead, its strongest momentum has come from decentralized AI, with Venice AI's recent surge a notable example. If Coinbase wants serious perps and outcome-market exposure, it may have decided the most efficient path is no longer building it on Base but deploying HIP-3 and HIP-4 markets on Hyperliquid using builder codes, with USDC as the quote asset. This interpretation is highly speculative, but the deal structurally enables such an outcome, and the incentive alignment is now there in a way it wasn't before.

The political timing also shouldn't be overlooked. Coinbase is a powerful crypto lobbying force in Washington. Having it financially aligned with Hyperliquid (staking the token, operating as treasury deployer, sharing yield with the protocol) may be helpful to Hyperliquid as it navigates the emerging U.S. crypto regulatory framework.

Lastly, the governance arc is worth pausing on. USDH's issuer was selected through an onchain validator vote in September 2025, a process Hyperliquid held up as a model for community-driven stablecoin selection (we covered it extensively at the time). Native Markets' winning pitch explicitly framed USDH as a way to reclaim value from "firms who treat Hyperliquid as an afterthought." Eight months later, the team that won that mandate sold the asset to one of the very firms it was set up to compete against, with no validator input on the new arrangement, and the Hyper Foundation endorsed the outcome. The protocol is arguably better off on the economics, but the tension between the original framing and the end-state is real, and worth flagging. – Lucas Tcheyan

Inflation Data Deflates Hopes for Another Rate Cut Anytime Soon

Markets spent the week relearning a very old lesson after the latest PPI print. Inflation is “transitory” in the same way the Fed’s post-2008 balance sheet was temporary: passing in presentation, persistent in practice.

The producer price index came in hot enough to make the bond market question how soft the economy’s landing is going to be: producer prices rose 6% year-over-year, and the monthly move was among the sharpest since 2022. Three months ago, the market was solidly pricing in two cuts by December. Two months ago, it was expecting one cut. Now it is flirting with “what if we get zero?” and, in some corners, even pricing the next move as more likely to be a hike than a cut by mid-2027.

A big part of the problem is energy. The Iran war has kept crude oil prices hovering around the psychologically rude $100-per-barrel neighborhood. For an economy as heavily reliant on imports as the U.S., that means input costs for producers are unambiguously rising. That matters because although PPI is not CPI, it is a canary in the coal mine for subsequent consumer price index prints. Companies do not have to pass through every cost increase immediately and can absorb some of it through compressed margins, but that will not hold for long. There has been no significant evidence of broad margin compression for public firms during this recent bout of inflation; firms will pass these costs on to consumers ... just with a lag.

The jobs market is also not giving the Fed much cover. Yes, there are headline layoffs in tech as Silicon Valley has rebranded “reduced headcount” as “AI efficiency.” But the broader labor market remains resilient enough that outgoing chairman Jerome Powell and the voting Fed members do not yet have a clean excuse to pivot dovish. The Fed’s dual mandate leaves it in a position where the math looks straightforward to markets: prices are rising too quickly, employment is still firm with a 4.3% jobless rate, and there is little reason to pour gas on that fire with a rate cut. If anything, the market thinks policymakers look more willing to sacrifice some labor-market strength to get inflation under control.

Kevin Warsh’s confirmation as the next Fed chair only makes the rate-cut setup more awkward. He arrives at the central bank’s helm with the White House still hoping for cheaper money, but also with a hot PPI print, oil-price pressure from the Iran war, and a resilient labor market. That is not exactly the credibility-maximizing moment to walk in, look at a 6% producer-price print, and say, “Great news, everyone, time to ease.” Warsh has spent years cultivating the image of a harder-money Fed critic, skeptical of post-crisis monetary excess and allergic to the idea that the central bank should warm up the money printer in response to every crisis. If his first major act is to cut into an inflation scare, he risks speed-running an Arthur Burns-esque discourse before he has even learned where the good coffee is.

Our Take

Crypto, as a risk asset, does not naturally love this setup. Higher-for-longer rates raise the opportunity cost of owning assets whose cash flows, if they exist, are mostly vibes, dilutive emissions, and regulatory arbitrage.

But there is a counterweight: if the CLARITY Act keeps moving toward passage, crypto gets something it has wanted for years, not freedom from regulation so much as a rulebook that does not change depending on which agency head woke up annoyed. Macro is weighing on the trade. The hope is that market structure may still buoy crypto. And in crypto, hope is often enough. – Thad Pinakiewicz

Other News

🖥️ Polymarket offers co-location for KYC’d/KYB’d customers

🤯 CME plans futures on compute and a Nasdaq crypto index

🤖 Claude helps user recover long-lost wallet with 5 BTC

🪨 BlackRock (1, 2) and JPM file tokenized MMFs to back stables

🔵 Circle raises $222m in token presale for its Arc blockchain

✋ ConsenSys, Ledger pump brakes on IPO plans

☀️ Coinbase offers loans for up to $100k against SOL via Morpho

💸 BlackRock, Janus tMMFs get instant redemptions into stables

📲 Schwab begins U.S. rollout of retail spot crypto trading

🕵️‍♂️ Deutsche Bank, Nasdaq back onchain sleuth Elliptic in $120m round

Chart of the Week: Actually, Stablecoins Are Good for Banks

Where does a stablecoin dollar actually come from?

Galaxy Research modeled the full funding picture and projected that, notwithstanding the bank lobby's claims, for every dollar leaving a U.S. bank deposit, two or more will likely arrive from abroad, making GENIUS Act stablecoins a probable net importer of foreign capital into the American financial system.

For more, read our report from last week.