Bernstein says failure would trigger a selloff; JPMorgan warns tokenization may shift to traditional infrastructure. Prediction markets imply 37% chance of passage.
Prediction markets give the Clarity Act a 37% chance of passing this year. Bernstein warned on Aug. 3 that failure would likely trigger a selloff. JPMorgan said the delay risks pushing tokenization onto traditional financial infrastructure instead of public blockchains.
The Clarity Act would divide crypto regulatory jurisdiction between the SEC and the CFTC. It would define when digital assets are securities or commodities and set rules for crypto intermediaries, including exchanges and custodians. The bill also provides a framework for decentralized finance. The Senate Banking Committee approved it in spring 2026 with bipartisan support.
The Senate then prioritized other legislation. Negotiations stalled over several unresolved provisions.
Four issues remain unresolved on the Senate floor, according to analysts tracking the bill. Ethics provisions require stricter disclosure for officials holding crypto. DeFi guidance is contested over how to define "functional decentralization." Stablecoin yield rules intersect with the GENIUS Act, which governs stablecoin issuance but leaves broader market structure questions unanswered. Anti-money laundering requirements differ from traditional finance rules.
The Senate did not list the Clarity Act on its agenda for the week of Aug. 3. That omission prompted the warnings from Bernstein and JPMorgan.
Bernstein analysts led by Gautam Chhugani laid out a two-phase scenario. In the near term, failure would likely push bitcoin below its current $63,000 range, they wrote. In the medium term, the SEC and CFTC would accelerate rulemaking under Project Crypto, the Trump administration's initiative for agency-led clarity. Agency rules can be changed by the next administration, the analysts said, so legislation remains "strategically important" for permanent certainty.
Bernstein also highlighted the venture capital dimension. Crypto venture funding in the U.S. declined about 40% between 2023 and 2025, according to PitchBook data, with founders increasingly incorporating in jurisdictions that offer regulatory predictability. If the Clarity Act fails before the 2028 election cycle, the U.S. could lose its position as the primary domicile for crypto protocol development, the analysts said.
JPMorgan analysts led by Nikolaos Panigirtzoglou said the longer the delay, the greater the chance that tokenization migrates to traditional infrastructure. Citadel Securities invested $400 million in Crypto.com. BlackRock launched tokenized money market funds. Both developments use existing regulatory structures, the analysts said. Without the Clarity Act, the path of least resistance is to tokenize assets within traditional rails, capturing value that public crypto networks were supposed to accrue.
The tokenized real-world asset market has grown more than 200% over the past year to over $30 billion, according to rwa.xyz. Citi projects tokenized securities could reach $5.5 trillion by 2030. If that growth happens on permissioned infrastructure controlled by banks and asset managers, public blockchain protocols lose their most promising source of institutional transaction volume, the JPMorgan analysts said.
International competition adds pressure. The EU's MiCA framework has been in force since mid-2025. Japan tightened exchange requirements under its FSMA-style regime. The UK is building a framework under the Financial Services and Markets Act. All three require licensing. The U.S. has no federal licensing regime for crypto, the analysts noted.
Even if the bill misses the summer recess, a lame duck session after the November midterms could provide a second window. Jefferies said in June that a compressed timeline would likely produce a narrower bill, stripping contentious provisions like DeFi guidance and stablecoin yield rules but still providing a clear SEC/CFTC jurisdiction split.
The main question is whether the bill appears on the Senate floor agenda before the recess ends. Prediction market odds above 50% would signal renewed momentum; a drop below 20% would likely trigger the selloff Bernstein described. The bitcoin price near $63,000 is also a marker. A sustained break below that level with legislative failure would confirm the bearish scenario.
As of Aug. 3, prediction markets implied a 37% chance of passage, down from above 70% in early spring.
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