Clarity Act’s odds of passing in 2026 crash from 70% to 37%

Prediction markets now put the odds of the Clarity Act passing before the end of 2026 at just 37%, down from more than 70% in early 2026, after Wall Street research firm Bernstein warned on August 3, 2026, that failure to pass the bill could trigger a fresh sell-off across crypto markets.

The weakening outlook has sparked concern among analysts, investors, and crypto executives who see the legislation as essential to establishing a clear regulatory framework for digital assets in the United States.

Research firm Bernstein warned on August 3 that failure to approve the bill could trigger another wave of selling across crypto markets. Meanwhile, JPMorgan argued that continued legislative uncertainty risks pushing the fast-growing tokenization industry onto traditional financial infrastructure instead of public blockchain networks.

“The current uncertainty continues to delay institutional adoption,” Bernstein analysts led by Gautam Chhugani wrote, adding that while regulators may step in through administrative action, congressional legislation would provide a far more durable solution.

Why the Clarity Act has become so important

The Clarity Act is widely regarded as the most comprehensive crypto market structure proposal ever introduced in the United States.

Its primary objective is to establish clear boundaries between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), ending years of confusion over whether many cryptocurrencies should be treated as securities or commodities.

For nearly a decade, the absence of federal legislation has forced regulators to rely largely on enforcement actions, creating uncertainty for exchanges, token issuers, custodians, and institutional investors.

If enacted, the bill would introduce rules governing digital asset classifications, crypto exchanges, custodians, decentralized finance (DeFi), self-custody rights, token issuance, and innovation exemptions.

Industry participants have repeatedly argued that this certainty would unlock greater institutional investment.

Larry Fink, CEO of BlackRock, has consistently emphasized that regulatory clarity is essential for broader institutional adoption of digital assets, stating that tokenization represents “the next generation for markets.” His comments have reinforced industry expectations that clear legislation could accelerate capital inflows into blockchain-based financial products.

Political deadlock continues to slow progress

Although the legislation cleared the Senate Banking Committee earlier this year with bipartisan support, several politically sensitive issues continue to prevent a final Senate vote.

Among the largest sticking points are stricter ethics rules governing public officials’ cryptocurrency holdings, how decentralized finance protocols should be regulated, whether stablecoin issuers should be allowed to offer yield-bearing products, and anti-money laundering requirements for blockchain-based financial services.

Each issue has become a major policy debate rather than a procedural disagreement.

Lawmakers remain divided over how decentralized protocols should be treated under federal law. Some senators argue that truly decentralized projects deserve exemptions from traditional registration requirements, while others believe broad exemptions could create loopholes allowing centralized companies to avoid oversight.

Stablecoin regulation has also complicated negotiations.

Questions remain over whether issuers should be allowed to provide interest or yield directly to holders, an issue carrying significant commercial implications within the rapidly expanding stablecoin market.

Without agreement on these remaining provisions, Senate leadership has yet to schedule the bill for floor consideration.

That delay prompted both Bernstein and JPMorgan to reassess the legislation’s prospects and the broader implications for digital asset markets.

Bernstein and JPMorgan see different risks

Bernstein believes failure to pass the Clarity Act would likely produce an immediate negative market reaction as investors unwind expectations that regulatory clarity was finally approaching.

However, the brokerage does not believe legislative failure would permanently derail the industry’s growth.

Instead, analysts expect U.S. regulators to accelerate rulemaking through Project Crypto, an administrative initiative designed to provide guidance on token classifications, self-custody, decentralized finance, and innovation exemptions.

“Administrative action can help close part of the gap,” Bernstein noted, “but legislation remains strategically important because agency rules can be reversed by future administrations.”

JPMorgan, however, highlighted what it considers a much deeper structural concern.

Analysts led by Nikolaos Panigirtzoglou warned that prolonged uncertainty could encourage banks and asset managers to build tokenized financial products entirely within existing financial infrastructure rather than on permissionless blockchain networks.

That trend is already visible as major institutions continue launching tokenized investment products using regulated financial systems instead of decentralized public chains.

The bank believes this would significantly reduce long-term transaction activity across public blockchain ecosystems, weakening one of crypto’s strongest institutional growth opportunities.

According to rwa.xyz, tokenized real-world assets now exceed $30 billion, while Citi has projected that tokenized securities could reach approximately $5.5 trillion by 2030, highlighting the enormous economic opportunity at stake.

Global competition adds pressure

While Washington continues debating crypto legislation, several major economies have already introduced comprehensive regulatory frameworks.

The European Union’s Markets in Crypto-Assets (MiCA) regulation is fully operational, providing licensing rules for crypto service providers across member states.

Japan has strengthened exchange licensing requirements, while the United Kingdom continues implementing its crypto framework under the Financial Services and Markets Act.

These jurisdictions now offer businesses significantly greater regulatory certainty than the United States.

As a result, several crypto companies have increasingly prioritized expansion into Europe, Singapore, and other markets with clearer legal structures.

Industry observers warn that every additional delay surrounding the Clarity Act increases the likelihood that innovation, venture capital investment, and blockchain development migrate overseas.

Bernstein estimates U.S. crypto venture funding declined sharply between 2023 and 2025 as founders increasingly chose jurisdictions with predictable regulatory environments.

What comes next for the crypto industry

Although the legislative calendar has narrowed considerably before Congress enters recess, analysts do not believe the proposal is finished.

Because the bill already secured bipartisan committee approval, lawmakers could revisit it during a post-election lame duck session or reintroduce a streamlined version in the next Congress.

Such a narrower version would likely prioritize the SEC-CFTC jurisdiction split while postponing more divisive issues such as DeFi oversight and stablecoin yield provisions.

Even that limited framework would remove one of the industry’s largest regulatory uncertainties and could encourage greater institutional participation.

For now, however, markets remain focused on whether the Senate can revive negotiations.

The coming months will determine whether the Clarity Act becomes the long-awaited foundation for U.S. crypto regulation—or another missed opportunity that allows competing jurisdictions to take the lead in shaping the future of digital finance.