CLARITY Act Odds Crash to 27% as Senate Focus Turns Elsewhere

Momentum behind the CLARITY Act weakened after Senate Majority Leader John Thune postponed action on the crypto market structure bill while lawmakers focused on Russia sanctions legislation and federal nominees. The Senate advanced the sanctions package on July 28, leaving fewer legislative days before the August 8 recess to consider the crypto bill.

However, negotiations have continued behind the scenes, and a revised draft of the CLARITY Act has now emerged after back-and-forth discussions between Republican and Democrat lawmakers. The updated proposal has reportedly gained early support from Democrats, including Sen. Catherine Cortez Masto, who signaled approval of the latest version sent to the White House, saying “We feel good about the chance to resolve this issue once and for all.” 

Industry groups have urged Thune to begin the cloture process before lawmakers leave Washington, even if the Senate cannot complete a final vote. A procedural vote would reveal whether the legislation has enough bipartisan support to move forward later this year.

"We'll see where the votes are," Thune said when asked about the bill's prospects.

The delay has increased concerns that lawmakers may run out of time before attention shifts to the November midterm elections, leaving little room to pass contentious legislation.

Why the CLARITY Act Matters

The CLARITY Act aims to establish a comprehensive regulatory framework for digital assets in the United States. Clear rules would give crypto firms greater confidence to expand operations, invest domestically, and serve American investors without worrying that future administrations could reverse regulatory policy.

The legislation would also define responsibilities between the Securities and Exchange Commission and the Commodity Futures Trading Commission, with the CFTC receiving jurisdiction over spot markets for digital commodities.

Many crypto companies took their business overseas during former SEC Chair Gary Gensler's enforcement campaign. While the current SEC has withdrawn several lawsuits and adopted a friendlier approach, many industry participants argue that agency policy alone does not provide long-term certainty.

Banking Industry Supports Bill With Limited Changes

The banking industry has also expressed support for the legislation while requesting targeted revisions. Speaking with CNBC, American Bankers Association CEO Rob Nichols said the organization supports a regulatory framework for digital assets and believes the United States can become the "crypto capital of the world." 

However, he said the banking industry is nudging lawmakers to make small, "surgical" changes to ensure interest-bearing payment stablecoins cannot draw deposits away from banks and credit unions, potentially reducing lending activity. According to Nichols, the proposed changes affect only 2 paragraphs within the roughly 600-page bill.

SEC Prepares a Backup Plan

If Congress fails to act, SEC Chair Paul Atkins said the agency stands ready to issue crypto market rules using its existing authority.

Atkins told CNBC that the SEC is "ready, willing and able" to write rules covering many of the same issues addressed by the CLARITY Act. However, he emphasized that legislation remains the better solution because statutes provide greater certainty than agency regulations, which future administrations can change.

The SEC's proposed regulatory framework could clarify the treatment of digital tokens, trading platforms, and tokenized securities. However, it would not permanently resolve jurisdiction between the SEC and CFTC.

Prediction Markets Reflect Growing Doubts

The Senate delay has affected market expectations. Earlier today, July 29, Polymarket odds reflected just a 27% chance that the CLARITY Act will become law in 2026, the lowest-ever probability recorded for the legislation.

Despite the setback, Coinbase Chief Policy Officer Faryar Shirzad remains optimistic. He noted that the House approved the legislation with broad bipartisan support and said recent Senate revisions incorporated numerous Democratic priorities, including expanded law enforcement and consumer protection provisions.

Shirzad added that he remains hopeful the Senate could hold a vote as early as August 3, allowing lawmakers to pass the bill before beginning the August recess.

Even if the SEC moves ahead with its own regulatory framework, only legislation can provide the long-term legal certainty needed for the U.S. crypto industry to plan future investment and growth.

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