The Clarity Act has been removed from the U.S. Senate’s voting agenda, lowering its chances of passing this year to 27%. Analysts predict that with limited time before the Senate’s recess this month, discussions on the bill are likely to be postponed to next month.
According to reports on Monday, the Senate’s published schedule for the day did not include the Clarity Act. The final weekday session before the Senate recess is set for August 7. If the bill isn’t addressed during this period, deliberations will be pushed to next month.
The Clarity Act is a market structure bill that aims to delineate the oversight authority of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) over digital assets. It also covers issues such as stablecoin rewards, public official ethics, and regulations for decentralized finance (DeFi).
Currently, a consolidated proposal combining bills from the Senate Banking Committee and the Agriculture Committee is pending. To end discussions and proceed to a vote, the bill requires 60 votes.
Even if all 53 Republican seats support it, at least 7 Democratic votes are needed. The required number of votes increases if there are absences or defections from the Republican side.
Even if the bill clears the Senate, the legislative process isn’t complete. The House must either approve the Senate’s amendments or both chambers need to reconcile the bill’s content. It then requires the President’s signature to become law.
Prediction markets also view the Clarity Act’s chances of passing this year as slim. A related poll on Polymarket showed a 27% probability of the Clarity Act passing by year-end, down 4 percentage points from 31% the previous day.
Galaxy Research, a blockchain investment firm, also lowered its estimate for the Clarity Act’s passage this year to 30% last month. Wall Street investment bank Bernstein stated in a report that the Clarity Act is the most significant digital asset legislation in U.S. history, but its chances of passing this year are diminishing.
Despite reaching compromises on certain issues like stablecoin interest payments, analysts explain that time is running short before the Senate recess. Bernstein analysts predict that if the bill fails to pass, the digital asset market will likely react negatively.
With the current downturn in the digital asset market, the fate of the Clarity Act remains a top concern for both the industry and investors. Even if the bill doesn’t pass, some speculate that the digital asset sector will increase its political influence ahead of the U.S. midterm elections in November.
Not only the digital asset industry but also traditional financial institutions are calling for swift action on the Clarity Act.
Coinbase, the largest digital asset exchange in the U.S., recently launched an advertising campaign urging lawmakers to pass the Clarity Act.
Asset management firm Grayscale also sent a letter to the Senate, urging a vote on the Clarity Act before the recess this month. BlackRock, Fidelity, Goldman Sachs Group, Inc., Charles Schwab, and Franklin Templeton have publicly expressed their support for the Clarity Act.
Some analysts believe that even if the Clarity Act doesn’t pass, the SEC and CFTC will independently develop regulations for digital assets. This is because the Donald Trump administration’s Project Crypto could lead to a series of regulatory guidelines that substitute for congressional legislation.
Bernstein predicts that if the bill’s passage is delayed, regulators will expedite efforts on criteria for classifying digital assets, DeFi guidelines, self-custody regulations, and establishing an innovation exemption for token issuance. They also expect ongoing policy support for tokenization, digital asset derivatives, and prediction markets.