Cathie Wood Is Buying Coinbase and Circle Stock as the Sell-Off Ramps Up Ahead of the Clarity Act Vote. Here's the Bet.

Ark Invest CEO Cathie Wood has long been a crypto bull. In the company's 2025 Big Ideas report, Ark Invest said its 2030 base-case price target for Bitcoin (BTC +0.53%) is $700,000, with a bull case of $1.5 million.

Although Bitcoin and other cryptocurrencies have been crushed this year, Wood and Ark don't seem to be giving up yet, as they typically take a long view of what they believe are groundbreaking technologies.

Ahead of a big potential U.S. Senate vote on the Clarity Act, Ark has been buying cryptocurrency names such as Coinbase Global (COIN +0.48%) and Circle Internet Group. Here's the bet.

Image source: Getty Images.

How the Clarity Act would benefit crypto companies

At the very end of June, disclosures from Ark Invest showed that its ARK Innovation ETF purchased 66,754 shares of Circle and 37,153 shares of Coinbase.

While we don't know the exact thinking of Wood and her team, there is a good chance they are buying Coinbase and Circle on the bet that the Senate will pass the Clarity Act, a broad regulation bill that crypto advocates see as a game changer. The bill seeks to create a framework for crypto regulation in the U.S. by doing three main things.

First, it provides a legal definition of a "mature blockchain" as "a blockchain system, together with its related digital commodity, that is not controlled by any person or group of persons under common control." The bill also provides a clear framework for dividing regulatory jurisdiction between the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

The CFTC would have exclusive regulatory authority over spot markets and cryptocurrencies that are intrinsically connected to a blockchain. Cryptocurrencies classified as digital commodities trading on "mature blockchains" would not be securities and therefore would not need to be registered with the SEC. There are other provisions in the law that seek to protect investors and prevent pump-and-dump schemes.

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NASDAQ: COIN

Coinbase Global

Today's Change

(0.48%) $0.76

Current Price

$159.20

Key Data Points

Market Cap

$42BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.Market cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day's Range

$158.68 - $167.93

52wk Range

$139.18 - $444.64

Volume

245.2K

Avg Vol

9.2M

Gross Margin

79.87%

Finally, the Clarity Act contains provisions on stablecoins, digital assets pegged to a currency or commodity, that prevent idle stablecoins from earning yield, but do allow yield to be issued based on rewards for certain activities, such as transactions.

Passage of the Clarity Act would be good for Coinbase and Circle for a few reasons. For one, a clear regulatory framework would enable more of the traditional finance world to engage with crypto without fear of regulatory repercussions.

Clearer jurisdictional boundaries between the SEC and the CFTC would make it easier for exchanges to offer different cryptocurrencies on their platforms without worrying about whether they are skirting securities registration laws.

The stablecoin provision is also very important. It is not a complete win for Circle and Coinbase, which would have liked to offer yield on idle stablecoins. However, banks were concerned that doing this could have led to a run on traditional deposits.

Still, the language suggests that crypto platforms can incentivize people to use stablecoins for transactions, which could expand their ecosystems and usage.

Will the Clarity Act pass?

The bill has been over a year in the making. The U.S. House of Representatives approved the legislation easily in mid-June last year, but it still hasn't cleared the Senate, which requires 60 votes to pass.

The Trump administration has been trying to get the law passed before the midterm elections. Congress is scheduled to be in recess from Aug. 10 to Sept. 11, adding more pressure to the timeline.

There are 53 Republicans in the Senate, so seven Democrats or independents are needed to make the law a reality. As of July 7, only two Democrats have publicly said they support the bill.

Furthermore, Sen. Mitch McConnell's (R-KY) status is currently unknown, as the longtime Republican senator has been hospitalized for the past several weeks with what is speculated to be a serious ailment.

As of this writing on July 9, Kalshi placed the odds of the Clarity Act receiving more than 60 votes from the Senate at just 25%, although these percentages change quickly.

Perhaps Wood and her team have studied the political landscape closely or simply believe that broad crypto legislation is only a matter of time.