The CLARITY bill probability drops from 82% to 54%: Why has the market suddenly turned pessimistic?

What is the probability of a bill being passed—and when does it reveal market expectations more clearly than the bill itself? When bets on the CLARITY Act in prediction markets slid from an 82% peak in February down to 54%—even after the Senate Banking Committee successfully advanced it by a 15-9 vote—the gap reflected not just a contest over legal text, but the combined pressure of three forces: fractures within the industry, a deadlock over ethical clauses, and constraints in the legislative calendar. As some analyses have pointed out, a drop from 82% to 54% within a year is a massive shift, showing just how bearish traders are about where this legislation is headed. And when the odds in prediction markets fall below 60%, historically that usually signals real uncertainty.

As of May 25, 2026, affected by industry divisions sparked by compromise proposals on stablecoin yield provisions, the Polymarket prediction contract fell 11% over the past 24 hours. The probability is currently 54%, trading volume is $430,600, and the total amount staked on the contract has reached $37.8 million. From the probability curve, traders’ judgment is becoming more and more cautious—the bill is not dead, but the road to signing is narrowing.

The full picture of the probability curve: Six key turning points from 82% to 54%

The forecast market probability for the CLARITY Act has swung sharply over the past five months, with each inflection point tied to a major event in the legislative process.

In January 2026, the Senate Banking Committee had planned to markup the bill on January 15, but on the eve of that decision, Coinbase CEO Brian Armstrong publicly said on X that he could not support the current draft, listing multiple major issues including stablecoin yields, tokenized stocks, DeFi provisions, and the SEC/CFTC jurisdictional split. The committee quickly announced a delay. This sudden turn put pressure on the forecast probability.

In February, as bipartisan negotiations continued, market outlook for passage within the year grew more optimistic, and the forecast probability briefly surged to a high of 82%.

In March, the banking industry rejected the compromise brokered by the White House, pushing negotiations into a new deadlock and causing the probability to fall sharply. On March 17, Citigroup—citing stagnation in the CLARITY Act legislative process—cut its 12-month Bitcoin target price from $143,000 to $112,000, becoming the first major Wall Street bank to publicly lower its crypto asset valuations due to legislative uncertainty.

Around the same time, Coinbase privately told Senate staff it could not accept the draft text dated March 23, and during an industry conference call it clashed with other firms. Some firms believed that giving up certain stablecoin reward provisions came at too high a cost, while others thought the risk of losing the overall legislative framework was greater. In March, Circle’s stock plunged 20% in a single day after the initial draft threatened to ban all stablecoin rewards.

In mid-April, the forecast probability fell further into the low-40% range, and market sentiment hit the lowest point of the year.

The turning point came in early May. Senators Thom Tillis and Angela Alsobrooks jointly released a compromise text on stablecoin yield provisions, allowing crypto firms to offer rewards for users’ proactive usage behaviors, but banning passive interest payments on idle holdings. Coinbase Chief Policy Officer Faryar Shirzad publicly praised the move the same day, saying that although banks received more restrictions, the crypto industry protected users’ ability to earn rewards based on real usage scenarios. That same day, Armstrong posted a brief message, “Mark it up,” reversing his earlier opposition.

This breakthrough was quickly reflected in the prediction market: probability climbed rapidly from 46% at the start of the month to 65% on May 6, reached 73% on May 11, and set the highest level in two months.

On May 14, the Senate Banking Committee approved a revised version of the bill with a 15-9 vote. All 13 Republican members voted in favor, and 2 Democratic lawmakers crossed party lines to support it. However, the market did not respond with sustained gains to this landmark development. After briefly rising above 70%, the probability began to decline steadily. According to data from Kalshi, the probability of the bill passing before 2027 fell from nearly 75% last week to 49%; the chance of passage before July was only 14%, and the chance before August was 37%.

As of May 25, Polymarket’s probability had fallen back to 54%. A total of $37.8 million in staked bets suggests that this pricing is backed by substantial, real commitments from traders.

Dissecting the triple resistance: Why the committee win didn’t translate into a rise in probability

Fluctuations in prediction market probabilities are not random; they are an ongoing process of pricing in known information. To understand the logic behind the 54%, we need to answer a core question: Why didn’t the 15-9 committee vote—rather than pushing probability back above 80%—instead trigger a continued decline?

First resistance: Stablecoin yield provisions sparked divisions within the industry

The release of the Tillis-Alsobrooks compromise in early May was seen as a key breakthrough to break the deadlock. Both Coinbase CEO Armstrong and CPO Shirzad publicly expressed support. However, this did not mean that all internal tension in the industry was fully eliminated.

The strategic split that appeared during Coinbase’s industry call in March showed that even after the compromise was reached, differences over stablecoin reward provisions still remained. Some firms viewed giving up certain reward clauses as too heavy a cost. Coinbase’s shift—from January’s stance of “Better to have no bill than a bad bill” to May’s “Mark it up”—while pushing the bill forward, also reflected deep underlying strain within the crypto industry around core interests.

The banking industry also did not stop lobbying. According to CoinDesk, the American Bankers Association (ABA) increased its lobbying efforts with senators ahead of the vote, warning that the updated language could still weaken bank deposits and financial stability. On May 10, ABA CEO Rob Nichols even sent a letter to banking executives to launch an emergency lobbying effort aimed at modifying the bill before the markup. American Banker noted that the banking industry had already secured its core demand in the compromise—the explicit prohibition of passive yields is, in essence, a win for the banks. But some trade associations were still seeking further tightening of active reward provisions.

Analysis released in April by the White House Council of Economic Advisers (CEA) provided data support for the controversy. A complete ban on stablecoin yields would only increase bank loans by about $2.1 billion, a growth rate of just 0.02%. The incremental loan increase for community banks would be only about $500 million, a growth rate of 0.026%—which is negligible compared with the risk of large deposit outflows claimed by the banking industry.

Second resistance: Ethical clauses became a prerequisite for Democrats’ support

A vote by the full Senate requires 60 votes to overcome procedural obstruction. With Republicans holding 53 seats, at least 7 Democratic lawmakers would need to switch their support. At the committee stage, only 2 Democrats voted in favor—and one of them, Alsobrooks, had already clearly stated that her committee vote did not amount to a commitment for the full-chamber vote. Even the 2 Democratic committee votes came with conditions, still leaving a significant gap from the 7 needed for the full Senate.

The core obstacle to Democratic support lies in the ethical clauses. The most politically sensitive amendment was proposed by Senator Chris Van Hollen. It aimed to prohibit the president, vice president, members of Congress, senior officials, and their family members from owning, promoting, or being associated with digital asset issuers or platforms—directly targeting the World Liberty Financial project linked to the Trump family. In the committee vote, this amendment was rejected 11-13 along party lines. That means the current version of the bill made no concessions on ethical provisions, directly blocking efforts to secure full Democratic support. Senator Gallego has already warned that if the ethical clause issue is not resolved, he could change his vote to oppose the bill during the full Senate vote.

Third resistance: A squeezed legislative calendar and midterm election pressure

Congress entered the Memorial Day recess on May 21. The Senate’s next round of normal legislative work would not resume until early June. This means that even if everything goes smoothly, the bill would at the earliest be submitted for debate in the full Senate in mid-to-late June.

At this point, the Senate’s legislative agenda is already highly crowded. Pending priorities still include appropriations bills, housing bills, agriculture bills, and the renewal of the FISA bill due by June, leaving uncertainty over whether the bill can move to a full-chamber vote in July and be passed before the August recess.

NYDIG previously warned that June through early August is the last window for a normal session. After late July, Congress enters recess until early September, and when it returns it will enter the preparation phase for the midterm elections. Senate leadership is unlikely to schedule a high-contentious vote that requires 60 votes. Senator Lummis issued the clearest warning of all: “This is our last chance to pass this bill at least before 2030. We can’t risk the future of U.S. finance.”

Taken together, the 54% probability is not a reflection of a market view that the bill is being rejected outright. Rather, it is a balanced equilibrium after the market has priced in the three layers of constraints above: historical divisions within the industry, a deadlock over ethical clauses, and pressure created by a narrowing legislative window.

Public sentiment: A tug-of-war among four forces

Public discourse around the CLARITY Act has formed a sharp four-way landscape, and the tensions among them are the underlying drivers behind the continued fluctuations in forecast probability.

Banking industry: Deposit safety over innovation incentives.

The core lobbying logic for the banking industry has always centered on one argument: if stablecoin holders are allowed to earn returns similar to deposit interest, the federally insured banking system would face a significant risk of large-scale deposit outflows. A January research report by Standard Chartered analyst Geoffrey Kendrick found that by the end of 2028, developed-market banks could lose about $500 billion in deposits, and that U.S. regional banks face the most severe impact because their net interest margin income can account for more than 60% of total income. Although the Tillis-Alsobrooks compromise met the banking industry’s core demand of “no passive yield,” some trade groups have continued lobbying for tighter restrictions on active reward provisions. An American Banker commentary notes that if continued pressure causes the CLARITY Act to fail or pushes it beyond the midterm elections, what would replace it is rulemaking by the Treasury under the GENIUS Act framework—yet this path lacks statutory authorization to limit stablecoin rewards, leaving banks in a worse position.

Crypto industry: From division to surface-level consensus.

In early 2026, clear disagreements within the crypto industry over stablecoin yield provisions led to visible splits. In January, Coinbase CEO Armstrong publicly withdrew support for the bill, causing the committee vote to be delayed. In March, according to media reports, Coinbase clashed with other firms during an industry conference call. Circle’s stock also dropped 20% in a single day in March after threats in the initial draft to ban all rewards.

After the compromise was issued in May, the industry appeared united on the surface. Armstrong publicly backed the bill’s advancement, and Shirzad praised the compromise as “workable.” But the fundamental disagreement over whether the cost of abandoning reward clauses is too high has not been fully resolved. The detailed text of the final version could still reignite the debate.

Some Democratic lawmakers: Ethical clauses are key bargaining chips.

Warren listed five specific shortcomings of the bill during committee review: weakening investor protections under securities laws since 1929; removing state-level consumer anti-fraud protections; allowing banks to hold high-risk assets; creating vulnerabilities on national security; and imposing no constraints regarding conflicts of interest involving the Trump family’s crypto interests. According to CoinDesk’s investigation commissioned by HarrisX, most registered voters support similar ethical restriction requirements. These actions indicate that ethical clauses within the Democratic Party have moved from an auxiliary topic to core bargaining chips.

Prediction market traders: Expressing probability with capital.

Price movements in prediction markets themselves constitute a unique kind of “public sentiment signal.” There are differences between Polymarket’s contract and the Kalshi contract on probability—Polymarket stands at about 54%, while Kalshi has fallen below 50% to 49%. On Kalshi, the “pass before July 2026” probability is as low as 14%, while the “pass before August” probability is 37%. These segmented time windows’ pricing precisely reflects traders’ differentiated assessments of feasibility at different time points. Overall probability is close to 50%, but probabilities concentrated in the summer window are much lower.

Industry impact: How regulatory pricing transmits into market pricing

The direction of the CLARITY Act will produce market transmission effects that extend well beyond the legislation itself.

From a capital markets perspective, Citigroup cut its target price for crypto assets in March due to delays in the bill’s progress. Bitcoin’s target price was lowered from $143,000 to $112,000, a decline of about 21.7%. Citigroup’s report also provided valuation ranges under pessimistic and optimistic scenarios, indicating that regulatory variables have become a core parameter in institutional valuation models. This impact is not only directional—it is quantifiable.

From the perspective of institutional market entry, the bill’s core value is that it addresses the fundamental pain point of “regulatory jurisdiction uncertainty.” At present, many institutional investors are choosing to stay on the sidelines because they lack a compliant pathway. If the bill passes, expect a notable acceleration effect as institutions’ expectations—such as those at Grayscale—translate into faster inflows of institutional capital. Conversely, if the bill stalls, the confidence that was initially built under the GENIUS Act framework could cool, increasing the risk of slower institutional inflows.

From the standpoint of global competitive dynamics, the EU’s MiCA framework has already been implemented, and jurisdictions such as Singapore and the UAE have also established digital asset market structure and regulatory regimes. If the United States fails to complete CLARITY Act legislation in 2026, it would mean that the world’s largest crypto market would continue operating without unified rules. That could create a long-term competitive disadvantage in the global race for crypto regulation.

Conclusion

The $37.8 million size of prediction market bets reflects not only traders’ attention to a bill, but a collective pricing of where U.S. crypto regulation is headed. A 54% probability is not a precise conclusion—it is a dynamic equilibrium. It has absorbed the momentum brought by committee progress, while being significantly suppressed by the threefold pressure: historical divisions within the industry, an ethical deadlock, and a narrowing legislative window.

The path from 82% to 54% shows one core logic: each legislative breakthrough milestone is important, but in the face of the 60-vote threshold in a full Senate vote, the breadth of industry consensus and the depth of bipartisan support are the decisive variables. From Coinbase withdrawing support in January, to the industry disagreements in March, to the surface-level consensus under the May compromise, the evolution of the crypto industry’s stance is itself one of the most worth-watching variables in this legislative battle. In the coming weeks, it will be a critical window to observe whether this consensus can hold up against the full-chamber vote.