Breaking! The probability of the Clarity Act passing has fallen below 50%, the last window in July is stuck, is crypto regulation going to fail?

Buddy, today I’m talking about a big deal—the Clarity Act, which has been debated in the U.S. for nearly a year. Latest Polymarket data: the probability of passage has dropped to just 49%. Can’t even hold 50%, and the market is already voting with its feet.

First, some background. This bill was originally set to be signed on July 4, but things have cooled off. Time is running out before the effective window before the midterm elections. The Senate can push things behind the scenes during the summer recess, but the House process is completely stalled. Senator Bill Hagerty said a couple days ago that the Senate will soon release the final text, giving lawmakers and industry insiders a clearer picture of the bill’s content, in preparation for debate and voting after July 13 when Congress reconvenes. But don’t get too optimistic—there are only about three weeks of actual working time before the August recess, and at least three major points of contention remain unresolved.

So what’s the debate? In May 2025, House Financial Services Committee Chair French Hill introduced this bill. It passed through two committee reviews in June and was approved by the full House on July 17. The full name is the Clear Act of 2025, and its core goal is to create a comprehensive federal regulatory framework for U.S. digital asset markets—key point being to clearly define what the SEC and CFTC are responsible for. The bill is 309 pages long, negotiated back and forth for 10 months, covering stablecoins, anti-money laundering, insider trading, exemptions for non-controlling developers, and more. On May 14, the Senate Banking Committee passed it by a vote of 15 to 9. Although it has been placed on the Senate legislative calendar, due to disagreements between the two parties on several core issues, leadership did not schedule a vote before the holiday break.

What are these issues? First, the stablecoin yield provisions—though temporarily shelved at the committee stage, they’re not fully resolved. Second, liability exemptions for DeFi developers—law enforcement worries this could create a regulatory vacuum. Third, ethics and conflict-of-interest rules—this involves disclosure of the Trump family’s crypto assets, which is particularly sensitive. Around June 9, closed-door bipartisan negotiations broke down. Senators Kirsten Gillibrand, Ruben Gallego, Bernie Moreno, Cynthia Lummis, and White House crypto czar Patrick Witt met but failed to reach an agreement. The GOP and the White House withdrew a provision supporting state attorneys general in suing the DOJ over ethical lapses, causing the talks to completely split.

But there’s some good news. The National Sheriffs' Association, which previously opposed the bill, has now shifted to neutral. They sent a letter to Senate Banking Committee Chair Tim Scott and Senator Elizabeth Warren, saying some issues with Section 604 of the bill have been resolved. Let me reiterate—Section 604 limits liability for developers of decentralized protocols. Supporters say developers shouldn’t be held accountable for user behavior; law enforcement fears this could become a loophole for money laundering, ransomware, drugs, and terror financing. The sheriffs’ association softening their stance is a positive sign.

You see, the situation for this bill is quite dramatic. Both parties do have some common ground, and both the administration and industry are pushing for it. But the interest conflicts over specific provisions and the procedural deadline often create the biggest resistance at the last mile. When the committee passed it in May, people were optimistic. Then ethics talks collapsed in June, and July 4 came and went without a signature—reality poured cold water. Now the final text is coming out, law enforcement has weighed in, and there’s a three-week critical window after July 13. The progress of negotiations in the coming days will directly determine whether this “game-changer” can actually be enacted by 2026.

Investment bank Jefferies’ view: If the bill passes smoothly, it will provide clear regulatory framework for digital assets, pushing banks, asset managers, and exchanges to accelerate deployment of tokenized assets, custody, staking, lending, and other services. It could also boost more crypto ETFs and crypto infrastructure companies’ IPOs. If delayed, regulatory uncertainty will persist, and traditional financial institutions will slow down their blockchain initiatives. Jefferies added that this process will affect concept stocks like Circle, Coinbase, and Bullish, as well as the market performance of some crypto assets. But in the long run, Circle’s bigger challenge isn’t regulation—it’s competition from banks, fintech firms, and payment companies.

Now Polymarket shows the probability at 49%, after hovering around 60% for a long time—indicating the market is both cautious and expectant about final passage by year-end. For retail investors like us, how relevant is this to the $BTC and $ETH in our portfolios? In the short term, uncertainty will suppress risk appetite. In the long term, if the bill fails, regulatory gaps will drag on, and institutional adoption will slow. Think for yourself.

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