CLARITY Act stalls as Trump stays silent on ethics deal

The ethics dispute is not the only obstacle. Prosecutors and law enforcement have raised concerns about provisions protecting non-custodial blockchain developers from Bank Secrecy Act registration requirements. Treasury Secretary Scott Bessent has rejected that interpretation, arguing the bill would codify existing Treasury policy.

Polymarket traders now assign a 27% probability that the CLARITY Act will be signed into law before the end of 2026. The market had climbed above 80% in February before Senate delays and disagreements over ethics and decentralized finance weakened expectations. We covered the earlier odds drop in our analysis.

Bernstein analysts warned that a Senate failure to advance the bill could trigger an immediate decline in Bitcoin and the broader crypto market. They described the potential response as an industry "knee-jerk" sell-off. "From a tactical standpoint, we expect the crypto market to bottom and start showing momentum towards late Q3 and early Q4 prior to the mid-terms," the analysts wrote in a Monday client report.

Bernstein expects a legislative delay could also pressure the SEC and CFTC to issue more guidance through Project Crypto, covering token classifications and a potential exemption for qualifying token issuances. Regulatory guidance could provide temporary relief for U.S. crypto companies. It would not carry the same permanence as a law passed by Congress.

The Senate is expected to recess soon, leaving little time for action before the midterm election calendar complicates the legislative path.