The odds of passing the Digital Asset Market Clarity Act, or CLARITY Act, have collapsed. Galaxy Digital has now slashed the likelihood of this regulation passing to just 10%. Similar sentiment is reflected on the prediction platform Polymarket, where the probability of the bill becoming law plunged from 82% to under 20%. This comes despite the crypto industry spending over $100 million to lobby for the regulation, which initially enjoyed bipartisan support.
The bill’s path initially looked smooth. In January 2026, the CLARITY Act advanced from the Senate committee with a 15-9 vote. At the time, the 309-page draft was even expected to be swiftly signed by the White House. However, that optimism has now stalled due to three key disputes blocking the regulation’s progress.
The Battle Over Yield and Decentralization Limits
The first deadlock centers on stablecoin yield rules. This dispute pits Coinbase against the banking lobby. If a yield ban is implemented, Coinbase stands to lose approximately $1.35 billion in annual revenue from its USDC rewards program. On the other hand, the banking lobby is pushing to maintain the stablecoin yield ban in the final draft.
The second dispute concerns the criteria for sufficient decentralization required for a token to be classified as a commodity. Democrats reject the current definition, citing the collapse of the FTX exchange as an argument. They point out that under the current definition, Sam Bankman-Fried’s FTT token could have qualified for commodity status.
Last-Minute Ethics Conflict
The third issue clogging the bill involves ethics rules for public officials. While the bill bans officials from issuing digital assets, it does not require them to divest their existing holdings. This dispute culminated on August 14, when the Office of the Comptroller of the Currency (OCC) granted a trust bank charter to World Liberty Financial, an entity 38% owned by the Trump family.
Senator Elizabeth Warren responded to the approval by calling it the most blatant self-dealing. Galaxy Digital’s move to slash the CLARITY Act’s probability to 10% occurred exactly one day after the OCC issued the trust bank charter.
Consequences for the $2.28 Trillion Industry
The Senate is not scheduled to reconvene until September 14. This timeline leaves very little time to debate the document’s contents before the end of the year. If the CLARITY Act fails to pass, the $2.28 trillion crypto industry will remain under an uncertain regulatory regime, caught between the jurisdictions of the SEC and the CFTC.
Without a permanent legal framework, the industry is forced to face the old reality once again. Market participants must rely on dispute resolution through case-by-case litigation in court and comply with executive policies that lack long-term regulatory uncertainty.
As reported by crypto.news.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
