From 75% to 50%: Why does the probability of the CLARITY Act passing continue to decline?

Mid-June 2026, the legislative outlook for the U.S. "Digital Asset Market Clarity Act" (CLARITY Act) is at a delicate and critical juncture. Galaxy Digital research chief Alex Thorn on June 5th downgraded the probability of the bill passing in 2026 from 75% to 60%, citing the shortened Senate schedule and unresolved disagreements over moral and illegal financial provisions. Meanwhile, the probability of the bill being signed into law in 2026 on the prediction market Polymarket has fallen back to about 50% in mid-June. Institutional assessments and market pricing are converging within the 50% to 60% range — this is neither an optimistic certainty nor a definitive legislative failure, but a genuine "50-50" moment.

Why a Bill Passed in the House Is Stalled in the Senate

The legislative path of the CLARITY Act has not been smooth. The bill was passed in the House in July 2025 with a bipartisan vote of 294 to 134. Since then, it experienced nearly ten months of stagnation in the Senate. On May 14, 2026, the Senate Banking Committee advanced a substitute text of the bill with a 15-9 vote. On June 1, the bill was officially scheduled on the Senate legislative calendar.

However, committee approval is not the end. While the bill made substantial procedural progress from the House’s high vote to Senate committee advancement, it did not translate into sustained market confidence. The reaction in prediction markets reveals a deeper issue: the legislative hurdle has shifted from "can it enter the voting process" to "can it garner enough votes." The full Senate vote requires 60 votes to overcome lengthy debate. Republicans hold 53 seats, meaning at least 7 Democratic cross-party votes are needed — and these 7 votes are still not secured.

Why Galaxy Digital’s Downgrade and Polymarket’s Pricing Point to the Same Direction

Although Galaxy Digital’s downgrade and Polymarket’s pricing differ slightly in numbers, they point to the same trend judgment. In the June 5th report, Alex Thorn provided two clear reasons for the downgrade: first, the Senate failed a procedural vote on the Foreign Intelligence Surveillance Act (FISA) authorization bill, occupying Senate time next week and pushing crypto legislation out of priority; second, there has been no significant progress on the moral and illegal financial provisions needed for bipartisan Democratic votes.

The market’s reaction is even more sensitive. The probability of the CLARITY Act passing in 2026 on Polymarket once reached a high of 73% in May but has since declined steadily. By mid-June, Polymarket’s assessment of the bill’s passage probability in 2026 is between 40% and 59%. The Kalshi platform’s pricing is more conservative, setting the passing probability at 46%. The data from these two major prediction markets are largely aligned — optimistic expectations are waning, and the legislative window is narrowing.

The convergence of institutional analysis and market pricing is not mere emotional resonance but a rational response to the same set of structural constraints: insufficient time, lack of votes, unresolved disputes.

Why Ethical Provisions Are the Biggest Barrier to Surpassing 60 Votes

Among the many controversies surrounding the bill, the ethical provisions have become the most critical sticking point. These provisions aim to prohibit senior government officials and legislators from profiting from inside information in the crypto industry. Democratic Senator Kirsten Gillibrand has explicitly stated she will not support the bill without such provisions. Senator Angela Alsobrooks — one of two Democrats supporting the bill in committee on May 14 — later said she would not support a full Senate vote unless the bill includes moral clauses covering government officials’ crypto holdings.

However, the White House has repeatedly signaled it will not accept provisions targeting the president’s crypto interests. Negotiations have thus reached an impasse. Closed-door talks on June 13, 2026, reportedly failed to reach an agreement, with one participant describing the negotiations as “bumpy.” Disagreements over ethical safeguards have turned what was once a broadly consensus-driven regulatory structure into a purely political deadlock.

How Developer Protections and Law Enforcement Balance Will Shape Final Legislation

Beyond ethical provisions, developer protections are another unresolved key controversy. The debate over the CLARITY Act centers on exemptions for developers and regulatory classifications for blockchain infrastructure participants. Galaxy Digital CEO Mike Novogratz pointed out that classifying open-source developers is the most contentious regulatory issue among stakeholders.

Industry participants believe developers do not handle user funds directly within networks and should not be classified as regulated financial intermediaries. However, law enforcement officials worry that protections for developers could complicate investigations into illegal financial activities. The White House has scheduled meetings with law enforcement agencies in June to discuss this issue.

The core of this dispute is how to balance protecting technological innovation with preventing illegal financial risks. The resolution of this issue will directly influence the final version of the bill in terms of regulatory strength and industry coverage.

How the Final Classification Framework Will Reshape Regulatory Landscape if the Bill Passes

The core value of the CLARITY Act is replacing fragmented, enforcement-led regulation with a statutory framework. According to the bill’s design, digital assets will be classified into three legal categories: digital commodities regulated by the CFTC, ancillary assets/investment contract assets regulated by the SEC, and permissioned payment stablecoins under banking regulators.

This classification framework will directly end years-long jurisdictional disputes between the SEC and CFTC. The bill will legally affirm the status of decentralized tokens like Bitcoin and Ethereum as commodities — previously based only on administrative guidance, with the potential for reversal. For institutional investors, clear asset classification means lower compliance costs and easier participation. Senate Banking Committee Chair Tim Scott predicts that if the bill passes, the market capitalization of cryptocurrencies could surge to $30 trillion.

The bill will also complement the GENIUS stablecoin legislation signed into law in 2025, forming a comprehensive federal regulatory framework for digital assets in the U.S.

If the Bill Fails: How Regulatory Uncertainty Will Extend the Industry’s “Gray Area”

If the CLARITY Act fails to pass within the 2026 legislative window, the U.S. crypto industry will continue under the current “enforcement-style regulation” environment. Agencies will continue to pursue regulation through litigation rather than clear legislative rules. The dispute over whether secondary market token sales constitute unregistered securities will persist.

Senator Cynthia Lummis warned on June 8 that if the Senate does not advance the CLARITY Act, foreign jurisdictions may set their own rules for digital asset regulation. This could cause the U.S. to lose its leading role in setting standards, with other jurisdictions’ rules becoming de facto standards.

Additionally, a failure to pass the bill could impact the inflow of incremental funds into approved crypto spot ETFs. Institutional investors tend to stay on the sidelines amid regulatory uncertainty, reducing market activity. The lack of regulatory clarity itself acts as a hidden market barrier.

Why the Legislative Window Before August Recess Is the Most Scarce Resource

The Senate will recess on June 26, with lawmakers expected to return around July 13. Before the August recess, only 31 legislative days remain in the Senate. Fox News business reporter Eleanor Terrett noted on June 14 that passing the bill before the White House’s July 4 target is “logistically impossible.”

The next legislative window is expected in the fall. However, with midterm elections approaching, the political agenda will be even more crowded, and bipartisan cooperation may decline further. Alex Thorn, in his downgrade, also pointed out: “As the calendar advances, the probability could change dramatically.”

Time pressure combined with political negotiations causes the legislative prospects for the CLARITY Act to oscillate within the 50% probability range. This is not a situation that can be summarized simply as optimistic or pessimistic but a dynamic process requiring ongoing tracking of procedural developments.

Summary

Mid-June 2026, the CLARITY Act stands at a genuine "50-50" crossroads. Galaxy Digital has downgraded the probability to 60%, Polymarket prices around 50%, both pointing to the same conclusion: the bill has a solid foundation for passage — passed in the House, committee approval, bipartisan support — but also faces real and severe obstacles: the 60-vote threshold not met, ethical clauses unresolved, legislative window narrowing. The final fate of the bill will be revealed in the coming weeks, and regardless of the outcome, its impact will extend beyond the U.S., reshaping global digital asset regulation and expectations.

FAQ

Q1: What legislative stage is the CLARITY Act currently in?

The CLARITY Act was passed in the House in July 2025, approved by the Senate Banking Committee on May 14, 2026, with a 15-9 vote, and scheduled for full Senate vote on June 1. It is now awaiting the full Senate’s decision.

Q2: How many votes are needed for the bill to pass? Why is 60 votes a key threshold?

The bill requires 60 votes in the Senate to overcome lengthy debate. With Republicans holding 53 seats, at least 7 Democratic cross-party votes are needed.

Q3: How will digital assets be classified if the bill passes?

The bill classifies digital assets into three categories: digital commodities regulated by the CFTC (e.g., Bitcoin, Ethereum), ancillary assets/investment contracts regulated by the SEC, and permissioned payment stablecoins under banking regulators.

Q4: What is the current biggest controversy surrounding the bill?

The ethical provisions are the main sticking point. Democrats demand clauses prohibiting senior officials from profiting from inside information, but the White House has indicated it will not accept provisions targeting the president’s crypto holdings. Developer protections and law enforcement balance are also ongoing negotiation issues.

Q5: What are the implications if the bill does not pass?

The U.S. crypto industry will remain under a “law enforcement-style” regulatory environment, with jurisdiction disputes between SEC and CFTC unresolved. The U.S. may lose its leading role in setting digital asset standards, with other jurisdictions establishing rules first.