Galaxy Slashes CLARITY Act Odds to 10% From May's 75% High

The SEC's Innovation Advisory Committee meets August 20 under the session title "Crypto's Regulatory Evolution: From Uncertainty to Clarity." Its agenda asks what regulators can modernize under current statutory authority and where congressional legislation remains necessary. The broader Crypto Sprint has already touched listed spot crypto trading, tokenized collateral, stablecoins and rule updates for blockchain-based market infrastructure. The market implications of those workstreams are tracked in crypto market analysis.

Galaxy interprets the regulator's recent urgency as partly a response to CLARITY's fading prospects. Reg Crypto overlaps with issues addressed by Title I of the bill. The Innovation Exemption touches areas Congress is also trying to regulate. In Galaxy's telling, agencies are doing piecemeal what the bill would do in one stroke, solving one by one the problems Congress wanted to address in a single comprehensive statute.

Why Agency Rules Can Be Reversed

A defeated CLARITY Act would not return U.S. crypto regulation to where it stood several years ago. The SEC and CFTC still have the authority to define significant parts of the market through interpretations, exemptions, registration frameworks and formal rules. What they cannot easily provide is permanence.

A statute can permanently redraw the jurisdictional boundary between the SEC and the CFTC and establish registration obligations that survive changes in agency leadership. Administrative action sits lower in the legal hierarchy. Galaxy notes that recent policy advances sit below the level of statute. SEC no-action positions and joint SEC-CFTC interpretations, plus OCC guidance for banks, can all be revised or withdrawn by a future administration without Congress repealing a law.

Formal SEC or CFTC rules are more durable than informal staff guidance because changing them generally requires another administrative process. They remain constrained by the agencies' existing statutory authority and can face court challenges over whether regulators overstepped.

CLARITY addresses a different layer of the problem. For institutions making decade-long decisions on custody, tokenization, exchange infrastructure and on-chain securities, Galaxy argues the permanence question matters more than whether current regulators are friendly to crypto.

A stalled CLARITY Act may still accelerate near-term regulatory action, Galaxy argues. The SEC needs time to test its experimental frameworks and eventually convert temporary relief into permanent rules. Galaxy expects the agency to publish Reg Crypto, the Innovation Exemption or both in the coming weeks or months.

That sequence, Galaxy says, would give crypto companies practical answers before Congress delivers comprehensive legislation. Banks and brokerages, plus exchanges, the firm expects, will keep building digital-asset infrastructure through the remainder of the current administration. The result, in Galaxy's telling, is a framework that becomes clearer operationally in 2026 while sitting on weaker political ground for the years that follow.

Passing the Senate requires 60 votes. The chamber's working window between the September 14 return and the early October recess leaves little room for the debate and amendment process CLARITY has not yet completed.