Galaxy Analyst Warns of Multiple Obstacles for CLARITY Act, 50% Chance of Passage Before Midterm Elections

On April 21, Alex Thorn, head of research at Galaxy Digital, warned that the critical U.S. cryptocurrency legislation, the CLARITY Act, has reached a pivotal moment. If deliberations are delayed until after mid-May, the likelihood of passing by 2026 will sharply decline. Currently, the probability of the bill becoming law this year is estimated to be around 50%, or even lower. Data from Polymarket also shows that its passage probability has dropped from 82% in February to 47%. Thorn pointed out that the Senate schedule is currently filled with matters such as military authorization for Iran, funding for the Department of Homeland Security, and presidential nominations, leaving little time for the bill. If the Democrats regain control of the House after the November midterm elections, legislative efforts may stall. Although the bill passed the House last July with a bipartisan margin of 294-134, negotiations in the Senate are more complex and face multiple obstacles. Firstly, disagreements over stablecoin rewards were the main reason for the delay from January. Secondly, provisions in the draft that clarify that non-custodial software developers do not fall under ‘money transmitters’ have faced opposition from law enforcement. Additionally, ethical provisions have some Democrats pushing to restrict government officials and their families from profiting from crypto assets during their terms. Lastly, concerns about the SEC’s authority and vacant commissioner positions add to the political complexity. Thorn believes that a full Senate vote in July is ‘theoretically possible,’ but would require extraordinary political will and coordination.