This Week in Crypto (July 20–27): The CLARITY Act Runs Out of Clock, Russia Legalizes Crypto for Trade, and Bitcoin Waits on the Fed

The biggest item in crypto news this week is a bill that didn't pass. After eighteen months of lobbying, the CLARITY Act got its final text on Wednesday and was dead by Thursday — killed by one clause about who enforces an ethics rule. Meanwhile Bitcoin refused to move ahead of the Fed, Russia legalized crypto for precisely the use case sanctions were meant to block, and the Bitcoin protocol lit a three-week fuse. Here's the week, story by story.

The week at a glance

The CLARITY Act ran out of clock

The Senate's crypto market-structure bill will not pass before the August recess, Majority Leader John Thune conceded on July 23. One day earlier, Senate Republicans had released the consolidated Banking-and-Agriculture text — 616 pages, per CoinDesk's July 22 reporting — containing the ethics language that had deadlocked negotiations for months. It bars the president, vice president, members of Congress, federal judges and their spouses from issuing or sponsoring digital assets while in office.

Three details undercut it. The ethics rule sunsets in 2029, regulators get a full year after enactment to implement it, and enforcement sits exclusively with the U.S. attorney general. Democrats had sought independent enforcement authority for state attorneys general; instead the Department of Justice alone would police a rule drafted largely around the sitting president's crypto ventures.

Senator Angela Alsobrooks called that arrangement an "unserious offer." By July 23, seven senators — Alsobrooks, Cory Booker, Catherine Cortez Masto, Ruben Gallego, John Hickenlooper, Mark Warner and Raphael Warnock — had signed a joint statement saying the text "falls short" on ethics, illicit finance, consumer protection and market integrity, according to The Crypto Times.

On X: @EleanorTerrett — pro-crypto Democrats are unhappy with the ethics provisions and the illicit finance and conflicts-of-interest sections; "the bill's path to 60 votes remains challenging."

The arithmetic explains the rest. Republicans hold 53 seats and passage needs 60, so roughly seven Democratic votes are required — and the seven most likely to supply them have now objected in writing. The Senate scatters around August 10. Prediction markets that priced 2026 passage above 80% in February had marked it to roughly 35% by late July, per CryptoSlate. Worth noting for readers tracking the policy stack: the Blockchain Regulatory Certainty Act, which keeps DeFi developers from being classified as money transmitters, survives inside the draft. It reaches law only if the bill does. Stablecoin issuers are in a similar holding pattern under the framework we covered in our explainer on the GENIUS Act, whose own rulemaking deadline lapsed on July 18.

Bitcoin's volatility trap: a $2.5B bet on one Fed meeting

Bitcoin spent the week compressed between roughly $63,800 and $66,910, waiting on the July 28–29 FOMC. It set the week's high on July 21 after five straight sessions of spot ETF inflows exceeding $600 million, then faded. By July 24 BTC sat at $64,304 and ETH at $1,860.78, down 1.6% and 2.9% on the day, according to Yahoo Finance — driven by tariff policy and Brent crude near $90–100 lifting inflation expectations and Treasury yields.

ETF flows tracked the reversal. After about $999 million of inflows across seven sessions, funds shed $225.1 million on July 23 and $240 million on July 24, with one large issuer accounting for $212.2 million of the Friday exit. The week still closed positive: spot Bitcoin ETFs +$33.79 million and spot Ethereum ETFs +$103 million, per Farside Investor data cited by The Crypto Times. The Crypto Fear & Greed Index held in the mid-20s to low 30s.

The louder signal was in derivatives. One block trader bought 20,000 calls at the $70,000 strike and sold 20,000 at $72,000, both expiring July 31 — roughly $2.5 billion in gross notional, CryptoSlate reported. Open interest at those two strikes has since reached nearly $5 billion, about 18% of Deribit's entire $28 billion Bitcoin options book. The position needs a roughly 9% move inside a week; Deribit's own metrics put the odds of Bitcoin touching $70,000 in July at under one in six.

A hold at 3.50%–3.75% is already priced, so only the statement's tone is genuinely live. That gap between positioning and probability is why the tape flatlined. One structural note that matters more than it looks: ETF exposure is a claim on a fund, not on coins — a distinction that becomes concrete in the fork story below. Readers who prefer holding keys rather than shares can review how a non-custodial setup works in Coin98 Super Wallet.

Russia legalized crypto for cross-border trade — and capped everyone else

Russia's State Duma passed bill No. 1194918-8, "On Digital Currency and Digital Rights," in its second and third readings on July 21, creating the country's first comprehensive crypto framework, per CoinDesk. Reading what it permits against what it forbids makes the intent unmistakable.

Most provisions take effect September 1, 2026, with unregistered firms given until July 1, 2027 to comply. The bill still needs Federation Council approval and a presidential signature.

On X: @BitcoinMagazine — quoting TASS before the vote: the law aims at "creating the legal conditions for cryptocurrencies to function in our country."

The timing carries the story. The EU's April 2026 sanctions package specifically targeted Russian crypto activity to close off evasion routes; three months later Moscow wrote cross-border settlement into statute while fencing ordinary Russians away from speculation. This reads less like adoption than like plumbing. Two other jurisdictions moved the same week: South Korea held its first stablecoin policy forum and signaled it wants the Digital Asset Basic Act advanced this year, and the UK Parliament opened an inquiry into banks restricting accounts for crypto firms.

Bitcoin set itself a three-week fuse

Two separate fork events are now scheduled for August, and this week the debate shifted from cryptography to governance. BIP-110, the "Reduced Data Temporary Softfork" authored by Dathon Ohm, would impose a one-year consensus restriction on arbitrary data embedding: scriptPubKeys capped at 34 bytes, data pushes and witness items over 256 bytes blocked. The target is Ordinals, inscriptions and BRC-20-style tokens.

Its activation design is the risk. It uses a modified BIP9 deployment requiring only 55% miner signaling — well below the 95% threshold of past soft forks — and a mandatory signaling window opens near block 961,632, around August 8. Actual support sits near 0.42%–0.83% of hashrate, roughly 5 EH/s, per Bitcoin.com News. Yet the latest Bitcoin Knots release enables BIP-110 by default, pointing a slice of the node population at rules the hashrate is not enforcing.

On X: @lopp — Jameson Lopp warns that nodes running BIP-110 code "stop working and get forked off the network in August," and has published a countdown timer to the window.

Lopp has called the proposal "doomed to fail," citing split risk and unspendable UTXOs in Taproot edge cases. The second fork isn't asking permission: Paul Sztorc's eCash hard fork targets block 964,000, around August 21, implementing Drivechain via BIP-300 and BIP-301. Every holder at the snapshot receives an equivalent balance on the new chain.

Here's what makes 2026 structurally unlike 2017. The largest spot Bitcoin ETF held $44.95 billion as of July 2, and its SEC filing states the trust will "permanently and irrevocably abandon" incidental rights to forked or airdropped assets. The single biggest pool of Bitcoin on earth cannot claim either fork. Self-custodied coins can — which is the sharpest practical argument for holding keys we've seen surface in months.

A $24 million bridge hack that had nothing to do with code

On July 22 at 21:30 UTC, security firm Blockaid flagged an exploit of a bridge operated by AFX Trade, a perps DEX on Arbitrum, CoinDesk reported. There was no contract bug. An attacker obtained the private keys of five bridge validators — exactly enough to clear the roughly two-thirds signing quorum — and signed a withdrawal of 24,150,000 USDC. The contract verified the signatures, waited out its 200-second dispute period, and paid. The funds became roughly 12,467.5 ETH, which carries no freeze mechanism. Arbitrum's native bridge was unaffected.

It was July's 14th crypto hack, taking the month past $97 million against June's $75.3 million, per DefiLlama data. The pattern is consistent through 2026: attackers go after the connective tissue between chains, and increasingly after keys rather than logic. If you move assets across networks regularly, it's worth understanding how cross-chain bridges actually custody funds before choosing one — a bridge's security rests on whoever controls its signing set, not on the chains it connects. Reviewing standing token allowances periodically is worth considering too; the Wallet Approval tool revokes permissions you've granted dApp contracts. We'd also suggest a look at the attack patterns targeting wallet users in 2026, since key compromise now outranks contract exploits.

Also this week

• Movement Labs filed for Chapter 11. The Move-language L2 developer filed under Subchapter V in Delaware, listing $100,000–$500,000 in assets against liabilities above $1 million after raising $141.4 million, per CoinDesk. MOVE is down more than 94% on the year to roughly a penny.
• A London quant fund is running a $67 million ETH short entirely on-chain. Arkham and Nansen linked a Hyperliquid wallet to Fasanara Capital; combined with a second institutional position it totals about $108 million. Context on the venue: what Hyperliquid is.
• Two comment periods closed quietly. The OCC's rule extending AML and sanctions standards to stablecoin issuers closed July 24; the CFTC's proposal on 24/7 trading and perpetual-style bitcoin futures closed July 27.

FAQ

Why didn't the CLARITY Act pass before the August recess? It lacked the votes. Republicans hold 53 Senate seats and passage requires 60, so about seven Democratic votes were needed. On July 23, seven Democratic senators said the July 22 text "falls short," objecting chiefly to enforcement of the ethics provision resting solely with the Department of Justice rather than also with state attorneys general. Majority Leader Thune acknowledged the same day that passage before recess was unlikely.

Will Bitcoin actually fork in August 2026? Two events are scheduled, and they carry different odds. Paul Sztorc's eCash hard fork at block 964,000 (around August 21) requires no network consensus and will proceed as a deliberate chain split. BIP-110 is a soft fork needing 55% miner signaling, and support measured near 0.8% of hashrate as of early July — low, though its mandatory signaling window around August 8 still constitutes a genuine coordination event.

Can Russians now pay for things with crypto? No. The law passed July 21 legalizes crypto for settling foreign trade contracts with non-residents, but domestic payments for goods and services remain prohibited. Non-qualified retail investors are also capped at roughly $3,800 per year per licensed intermediary. Most provisions take effect September 1, 2026.

Do Bitcoin ETF holders receive coins from a fork? Generally not. The largest spot Bitcoin ETF, holding $44.95 billion as of July 2, states in its SEC filing that the trust will "permanently and irrevocably abandon" incidental rights to forked or airdropped assets absent a regulatory change. Holders of self-custodied Bitcoin receive balances on both chains at the snapshot.

How was AFX Trade exploited if the contract wasn't buggy? The attacker compromised the private keys of five bridge validators, enough to satisfy the roughly two-thirds signing quorum. The contract behaved correctly: it verified valid signatures, observed a 200-second dispute period, and released 24,150,000 USDC. It was an operational key-management failure rather than a code vulnerability.

What to watch next

Wednesday's FOMC decision is the near-term catalyst, with roughly $5 billion of options open interest stacked at strikes that only pay if the statement reads dovish. After that, attention shifts to whether Thune runs a floor vote purely to record positions, and to the August 8 BIP-110 signaling window. For readers weighing ETF exposure against holding keys, this week made the trade-off unusually concrete — Coin98 Super Wallet supports self-custody across 120 blockchains if you'd rather own the coins than a claim on them.

Last updated: July 2026