Market price movements are rarely driven solely by sentiment; when the probability of the CLARITY Act’s passage falls from above 70% to 54% within just a few weeks, while during the same period the bill advances in the Senate Banking Committee by a vote of 15 to 9, this seemingly contradictory trend does not reveal simple cyclical swings of market mood. Instead, it points to deeper structural impasses within the legislative process.
As of May 27, 2026, on the Polymarket platform, the predicted probability that the CLARITY Act of 2026 will be signed into law stands at 54%, and total contract bets have already exceeded $38.0 million. On the Kalshi platform, meanwhile, the probability of passage before 2027 for the bill has slid from nearly 75% previously to 50%. The probability of completing the legislation before July is only 14%, and before August only 37%. The directions of the two main prediction markets’ data are broadly consistent: optimistic expectations are fading, and the legislative window is tightening.
Why prediction market probabilities turned six times in three months
The prediction market probability for the CLARITY Act has seen intense fluctuations over the past five months, and each turning point has corresponded to major developments in the legislative process. In January 2026, the Senate Banking Committee was scheduled to consider the bill, but on the eve of the decision, Coinbase CEO publicly said it could not support the current draft; the committee then announced a postponement, and the probability faced pressure for the first time. In February, as bipartisan negotiations continued, market sentiment warmed and the probability briefly climbed to a peak of 82%. In March, after the banking industry publicly rejected a compromise brokered by the White House, negotiations fell into a new round of stalemate and the probability dropped sharply. In mid-April, the probability fell further into the 40% range, hitting the lowest point of the year.
An early May breakthrough briefly boosted the market. A group of senators jointly released a compromise text on stablecoin yield terms, allowing rewards based on users’ actual usage behavior but banning passive interest on idle holdings. The probability jumped rapidly from 46%, reaching 73% on May 11. On May 14, the committee approved a revised version of the bill by a vote of 15 to 9, but the market did not respond with sustained gains—after briefly touching above 70%, the probability began to slide persistently downward. This coaster-like volatility clearly shows that “committee approval” is no longer the core variable pricing the market.
Why the stablecoin yield dispute became the bill’s central bottleneck
The fundamental deadlock that caused the bill to be delayed for four months previously comes down to a single provision: the stablecoin interest payment ban. Banks, driven by concerns about deposit outflows, advocate a blanket prohibition on stablecoin interest payments. The crypto industry argues that this would directly undermine its core profit model. JPMorgan Chase CFO publicly warned that allowing stablecoins to generate yield could break deposit financing models’ systemic stability.
The bipartisan compromise introduced in early May temporarily broke the stalemate: it bans interest accruing purely on static holdings, but allows incentive earnings tied to real business activity, including compliant scenarios such as payments for transfers, trading activity, and asset pledges. However, the compromise did not fundamentally eliminate the disagreement. Within the crypto industry, attitudes toward the fine details of the provision are also split—some companies think the cost of giving up certain reward provisions is too high, while others believe the risk of losing the overall legislative framework is greater. Whether this fragile balance on the provision can hold until the bill’s final passage remains a source of uncertainty for how the market continues to price the outcome.
How an ethics provisions deadlock makes the Senate’s 60-vote threshold hard to clear
Even setting aside the stablecoin dispute, the CLARITY Act still faces a political obstacle in the Senate that is even harder to overcome. To break the long debate procedure, the bill needs 60 votes. Currently, Republicans hold 53 seats in the Senate, which means supporters must secure at least 7 Democratic votes.
The “price” of these 7 votes is concentrated on a single ethics provision. The provision aims to prohibit senior government officials and legislators from profiting from the crypto industry using insider information. Democratic Senator Gillibrand has made clear that she will not support the bill without such a provision. But the White House has repeatedly signaled it will not accept provisions tailored to protect the president’s cryptocurrency asset interests. TD Cowen’s Washington research team noted that multiple recent controversies involving the president have further increased pressure on Democrats to add conflict-of-interest provisions, while also making Republicans reluctant to move legislation that could force them to vote against related amendments.
As of the committee vote on May 14, the Senate Banking Committee had received more than 100 amendments— the highest number of amendments in the committee’s history for a single legislative vote. Of these, only Senator Warren filed 44 amendments, most centered on ethics and conflicts-of-interest issues. When the number of amendments is so large and the core disagreement is focused on conflicts of interest at the top levels of government, the pace of advancing the legislation will inevitably be severely affected.
Why Senate schedule pressure shuts the legislative window early
Time may be more urgent than political disagreement. With only about nine weeks left before the Senate’s effective session adjourns for the August recess, once that window is missed, bill advancement would coincide with the midterm election cycle and the fiscal budget cycle, making it far more difficult to pass within this Congress’s term.
Galaxy Research’s research director previously assessed the probability of passage within 2026 at 75% and predicted that the signing could be completed in the week of August 3. But the White House’s earlier milestone targeting July 4 has been widely viewed as overly aggressive, and Senator Lummis said that an all-Senate vote in June “may be quite optimistic.” In midterm election years, major legislation rarely continues to move forward after lawmakers leave for recess and resign their seats. Bets on short-term milestones in prediction markets have shrunk dramatically—on Kalshi, the probability of passage before July is only 14%, and before August only 37%—indicating traders are rapidly repricing as the time window tightens.
How deferring legislation to 2027 could reshape the industry
If the CLARITY Act cannot be passed within this Congress’s term, the push for comprehensive crypto legislation could be postponed until 2027. TD Cowen has warned that if this year cannot resolve it, the timeline could be pushed to 2027, and implementation rules might not officially take effect until 2029.
The industry ripple effects of this outlook can be evaluated across multiple dimensions. On the certainty of regulation, without federal legislation, the crypto industry would remain exposed long term to the risk of government policies changing repeatedly in the future. On the flow of capital, institutional capital is unlikely to enter at scale without a clear regulatory framework, and some investors who expected the bill to pass may adjust their positions early. On the competitive landscape, if U.S. legislation continues to be delayed, other jurisdictions’ regulatory frameworks will keep improving, and the global crypto regulatory competition landscape will further harden in a state where the U.S. has reduced depth of involvement.
If the bill stalls this year, what other legislative paths are possible
Even if the CLARITY Act is not passed in 2026, it does not mean a full stop to U.S. crypto regulation. On March 17, 2026, the SEC and CFTC jointly released a 68-page interpretive document, explicitly classifying 18 types of crypto assets as “digital commodities,” including Bitcoin, Ether, Solana, XRP, and Litecoin. This transitional document can fill legislative gaps in the short term, but it cannot replace the comprehensive authority of enacted statutes.
On May 19, 2026, President Trump signed an executive order directing federal financial regulators to update regulations to integrate digital assets and traditional financial services, and remove regulatory barriers that hinder innovation. The direction of coordination between the executive order and legislation is consistent— a structural regulatory framework is taking shape, but the timing for comprehensive enactment remains uncertain. TD Cowen expects that if the bill is delayed until 2027, the political composition of the next Congress could change, and the legislative path would face more variables.
Frequently Asked Questions (FAQ)
Q1: What is the core content of the CLARITY Act currently?
The CLARITY Act seeks to clarify in law the boundaries of the SEC’s and CFTC’s regulatory responsibilities for digital assets. It divides digital assets into three categories: digital asset commodities are governed by the CFTC, restricted digital assets are governed by the SEC, and stablecoins are jointly regulated by both agencies.
Q2: Why did the bill’s passage probability fall from above 70% to around 50%?
Three layers of resistance overlap: the industry-versus-banking split triggered by the stablecoin yield provision, a cross-party stalemate caused by the conflict-of-interest provision, and time pressure created by an effective session of fewer than nine weeks before the August recess of Congress.
Q3: When will the bill reach a final outcome?
The White House previously targeted signing on July 4, but this milestone is widely seen as overly ambitious. The Senate needs to complete the full-vote procedure before the August recess; if that window is missed, the legislation may be pushed to 2027.
Q4: If the bill is delayed until 2027, what impact will the industry face?
On the regulatory level, the industry will face long-term policy uncertainty, and large-scale entry of institutional capital may continue to be delayed. During the transition, the SEC and CFTC joint interpretive document can provide interim guidance, but it cannot replace the comprehensive authority of enacted statutes.
