CLARITY Act’s Year-End Passage Odds Sink to Record-Low 32%

The CLARITY Act is designed to establish a US market structure for digital assets and clarify the respective roles of the Securities and Exchange Commission and the Commodity Futures Trading Commission. Its progress is closely watched by crypto exchanges, token issuers and traditional financial institutions because it could shape compliance requirements and determine how digital assets are regulated across federal agencies.

The Solana Policy Institute’s chief executive said the bill was stuck in “August recess purgatory” and assigned it only a 10% chance of passage before the November 2026 midterm elections. That assessment is more pessimistic than pricing on prediction markets including Polymarket and Kalshi, reflecting mounting concern that traditional institutions’ involvement and election-year politics have made a congressional agreement substantially harder to reach.

The Digital Asset Market Clarity Act would define how the Securities and Exchange Commission and Commodity Futures Trading Commission oversee crypto markets, giving the CFTC a central role in digital commodities while preserving SEC authority over some primary-market transactions. The House passed H.R. 3633 by 294-134 on July 17, 2025, but a revised Senate measure needs 60 votes to clear procedural hurdles. That makes Democratic support — and safeguards against conflicts involving elected officials’ crypto businesses — central to its prospects.

Senate Republicans released a merged draft on July 22 that would bar senior federal officials, including President Donald Trump, from issuing or sponsoring digital assets. The proposal gives Trump one year to divest or place businesses in a blind trust, relies on the Justice Department for enforcement and expires when the next president takes office. Democratic Senator Ruben Gallego on July 23 called it “not a serious effort” and said he would work with Republican Senator Thom Tillis on alternative language. The Senate’s August 8 recess is squeezing the timetable.

US prediction markets have expanded rapidly, intensifying a jurisdictional fight over event contracts offered by platforms including Kalshi and Polymarket. Commodity Futures Trading Commission Chair Michael Selig maintains that such contracts are swaps under the agency’s exclusive authority, while several states have pursued lawsuits tied to sports wagering. The debate carries added weight because Selig is the CFTC’s only Senate-confirmed commissioner, leaving a regulator normally led by a five-member panel facing questions about its capacity and enforcement resources.

At a July 21, 2026, hearing of the House Agriculture Committee’s Subcommittee on Commodity Markets, Digital Assets, and Rural Development, Katten Muchin Rosenman partner Carl Kennedy said the CFTC was too short-staffed to oversee the sector fully. Kennedy said the Senate’s pending Digital Asset Market Clarity Act could provide additional authority, but argued that Congress should also supply resources for digital assets and prediction markets. Republican senators are seeking a vote before the August recess and said updated bill text would be released soon.

The Digital Asset Market CLARITY Act aims to establish a federal regulatory framework for U.S. digital asset spot markets and clarify the respective authority of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). The House passed the bill by 294–134 on July 17, 2025. It would shape compliance standards for trading platforms, token issuers and investors.

The U.S. Senate Committee on Banking, Housing, and Urban Affairs advanced the bill by 15–9 on May 14, 2026, ending about four months of negotiations. It must next go before the full Senate and secure at least 60 votes to clear the procedural threshold. The period before the August recess is a critical window. Bitget CEO Gracy Chen said the legislation would help move the crypto industry out of a regulatory gray area and toward mainstream compliance.

The U.S. CLARITY Act would shape stablecoin rewards and the regulatory framework for digital assets. If an exemption for retail users is retained, ordinary consumers could continue receiving stablecoin rewards. The provision is particularly important to Coinbase, which relies on related yield-based business and could see an impact on its core revenue and the competitiveness of the U.S. crypto industry.

Polymarket at one point put the probability of the CLARITY Act passing in 2026 at 70%, offering a glimmer of hope in Coinbase’s effort to protect its revenue. The latest market odds, however, have fallen to 38%. With only 28 days remaining until a key deadline at the end of May 2026, the bill may struggle to become law this year unless Congress advances it in time.