U.S. CLARITY Act Legislation Gains Momentum: What Is the Real Catalyst Behind Bitcoin's Rise?

The CLARITY Act, officially known as the “Digital Asset Market Clarity Act of 2025,” is the most comprehensive cryptocurrency market-structure legislation currently being advanced by the U.S. Congress. The bill was jointly introduced on May 29, 2025, by the House Financial Services Committee and the Agriculture Committee, and on July 17 of the same year it passed the House with 294 votes in favor, after which it was sent to the Senate for review.

The bill’s core goal is to address the longstanding regulatory ambiguity that has plagued the U.S. digital asset market. Previously, the boundary between the SEC and the CFTC was unclear, resulting in high compliance costs for businesses and stifling innovation. By delineating the jurisdictional boundary between the SEC and the CFTC, the CLARITY Act brings most spot trading of eligible tokens under CFTC regulation, while the SEC continues to oversee matters such as initial public offerings, investor protection, and information disclosure. The bill introduces the concept of “digital commodities,” referring to digital assets whose value primarily depends on the functional use of blockchain systems; traditional securities and stablecoins are not included. For mainstream crypto assets such as Bitcoin, this classification path implies they will very likely fall under CFTC jurisdiction, facing a relatively flexible, principles-based regulatory approach rather than the SEC’s strict information disclosure and registration requirements.

In addition, the bill also establishes unified information disclosure and conduct standards, requiring developers to provide standardized project information and setting registration and regulatory obligations for exchanges, broker-dealers, and market makers. These provisions are intended to replace the SEC’s previous “enforcement in place of regulation” model with a clear statutory framework, providing a viable compliance pathway for responsible digital-asset projects.

What is the current level of legislative progress and the odds of the bill being passed?

On April 13, 2026, after the U.S. Senate concluded its Easter recess, it resumed full session, and the CLARITY Act entered the final sprint stage of its legislative window. The markup in the Senate Banking Committee is targeted for late April; if the bill misses this window, the probability of completing legislation within 2026 will sharply drop to an “extremely low” level.

From the legislative process perspective, before the bill is formally signed into law, it still needs to complete the Banking Committee markup, pass the full Senate with 60 votes, coordinate the version with the Agriculture Committee, coordinate the version with the House’s July 2025 version, and finally be delivered to the President for signature—these five steps all need to be completed within less than two months. Market assessments of the bill’s passage probability vary significantly. Wintermute policy director Ron Hammond gave an estimated 30% chance of passage, predicting Kalshi’s odds in the market are slightly above 50%, while Punchbowl’s research result for lobbyists was 26%. Previously, Bitwise’s Matt Hougan had assessed that the probability of passage had fallen from 72% to 42%.

Senator Cynthia Lummis issued a warning: “This is our last chance to pass the CLARITY Act before 2030.” The Memorial Day recess will begin on May 21. If the bill fails to make key progress in the Senate before then, the legislative process may fall into the political cycle of the midterm elections, at which point it will face even more uncertainty.

Why has the bill encountered resistance in the Senate?

The stablecoin yield issue constitutes the core obstacle to advancing the legislation. Banking industry groups worry that allowing stablecoin issuers to pay yields would trigger large-scale deposit outflows and threaten financial stability in the traditional banking system. The key logic of the Tillis-Alsobrooks compromise framework that has already taken shape is: prohibit crypto platforms from paying interest on mere stablecoin balance holdings, but allow incentive and reward programs tied to payment activities and platform usage. This means users cannot earn passive income simply by holding stablecoins, but they can still earn by participating in activities such as on-chain lending and liquidity provision. This distinction addresses banks’ concerns about deposit flight while preserving room for DeFi ecosystems to operate. However, the banking industry is still seeking to further narrow the definition of activity incentives, and there remains room for both sides to negotiate the specific wording.

In addition, conflicts of interest are also one of the obstacles to moving the bill forward. Democrats are actively pushing to restrict senior government officials—including the President—and their family members from participating in certain crypto financial activities. This provision has triggered partisan divisions within Congress. Coinbase CEO Brian Armstrong’s shift in position—from clearly saying in January, “Better to have no bill than a bad bill,” to publicly announcing support on April 10—reflects the complex evolution of the political dynamics. Based on market estimates, Coinbase’s stablecoin-related revenue accounts for about 20% of its total revenue, and Armstrong’s endorsement is a strategic choice after confirming that there is still room to retain the activity incentive provisions.

If the bill is passed, what structural changes will the crypto market face?

From the perspective of market structure, once the CLARITY Act is passed, it will bring multiple structural impacts. In terms of asset classification, the bill will clearly define whether digital assets belong to “digital commodities” or “digital securities.” A JPMorgan analysis points out that mainstream tokens such as XRP, Solana, Litecoin, Dogecoin, and Chainlink could be classified as commodities, subject to a relatively more lenient CFTC regulatory framework, significantly reducing compliance burdens.

In terms of institutional access, the bill will clarify registration and custody standards for crypto intermediaries, enabling traditional financial institutions such as BNY Mellon and State Street Bank to legally custody digital assets. The current fragmented and uncertain regulatory framework keeps many large asset management institutions, banks, and pension funds on the sidelines due to legal and compliance risks. A comprehensive market-structure legal framework would greatly reduce this ambiguity, giving institutions confidence to allocate to crypto assets at scale.

In terms of supporting innovation, the bill allows new projects to raise up to 75,000,000 dollars annually without full SEC registration during their transition to decentralization, which will provide an important compliance buffer for domestic U.S. crypto startups. At the same time, the bill also includes protection provisions for software developers, explicitly stating that developers who publish or maintain code without controlling customer funds are not considered financial intermediaries—providing legal certainty for developers of open-source protocols.

What assessments have mainstream institutions made about the bill’s market impact?

JPMorgan analysts’ team believes that U.S. market-structure legislation is most likely to be approved by mid-2026 and become a positive catalyst for the second half of the crypto market. JPMorgan also reiterated its long-term target price for Bitcoin of $266,000, which is derived using a comparison method adjusted for fluctuations in gold prices. JPMorgan Managing Director Nikolaos Panigirtzoglou said: “Although crypto market sentiment remains largely negative, we still believe that market-structure legislation is likely to be approved by mid-year, which could become a positive catalyst for a recovery in the crypto market in the second half.”

Citi, meanwhile, in March lowered its 12-month Bitcoin target price from 143,000 dollars to 112,000 dollars, a reduction of about 21.7%. Analyst Alex Saunders noted that with the bill’s progress blocked in the Senate, the regulatory catalyst that could have led to a market re-pricing may be difficult to materialize in the short term. Citi’s optimistic scenario is 165,000 dollars (legislation passes and institutions accelerate into the market), and its pessimistic scenario is 58,000 dollars (a macroeconomic recession combined with the legislative failure). Bitwise CIO Matt Hougan listed the CLARITY Act as one of the three major catalysts for Bitcoin to set a new all-time high in 2026, with the other two being “no more major liquidation events like October 10” and “a stable stock market.”

Based on current market data, how is the market pricing the uncertainty of the legislation?

As of April 14, 2026, according to Gate.io market data, Bitcoin is trading in the 70,000-dollar range. Since Trump’s election victory in November 2024, Bitcoin has surged from around 70,000 dollars to a record high of 126,000 dollars in October 2025. But since February 2026, amid factors such as the CLARITY Act process being stalled, Bitcoin has gradually fallen below the 80,000-dollar and 70,000-dollar levels, and at one point dropped to 60,000 dollars, hitting its lowest point in nearly 16 months. This has driven more than $2 billion in total liquidations across the entire crypto market within 24 hours.

Polymarket’s forecast shows that Bitcoin has an 82% probability of falling below 65,000 dollars within 2026, and the probability of dropping below 55,000 dollars has risen to about 60%. This type of pricing suggests that the market is continuously factoring the risk of legislative delays into asset prices, rather than absorbing negative news in one discrete event. If the bill is ultimately passed, this accumulated discount could be released into positive price action in the short term; if the bill fails to be passed within 2026, the market may need to further recalibrate its expectations for when regulatory benefits will be realized.

What are the real drivers behind Bitcoin’s potential upside going forward?

Analysts generally agree that the passage of the CLARITY Act itself does not directly equate to an increase in Bitcoin’s price; rather, it clears institutional barriers for large-scale inflows of capital. A JPMorgan analysis notes that by passing the bill, regulatory clarity would be brought, the “enforcement in place of regulation” status quo would be ended, asset tokenization would be promoted, and broader institutional participation would be encouraged—thereby reshaping market structure.

From a price-driver logic standpoint, Bitcoin’s price trend shows a clear correlation with the legislative process. Citi’s report states that before legislative progress becomes clear, Bitcoin may first trade sideways around 70,000 dollars, with the market more likely to digest uncertainty through range-bound movement rather than quickly launching a new upswing. JPMorgan, meanwhile, emphasizes that legislation could become the turning point that investors have been waiting for—“the key is not just that the price goes up, but that the entire market structure is upgraded to be more professional, making the digital asset ecosystem more standardized and easier to use, and attracting more widely participation from institutions.”

It is also important to note that the timing of market reaction after the legislation is passed remains uncertain. Even if the bill is approved by mid-2026, the implementation of substantive provisions still depends on regulatory bodies such as the CFTC issuing related rules, so the actual timing of institutional capital entry may lag behind the legislative event itself. In addition, changes in macro liquidity and the global economic environment also have a profound impact on Bitcoin’s price, and the legislation is only one of many variables.

Summary

The core value of the CLARITY Act lies in establishing a clear, enforceable statutory regulatory framework for the U.S. digital asset market and completely ending the “enforcement in place of regulation” situation caused by ambiguity in jurisdiction between the SEC and the CFTC. From the legislative process perspective, April through May 2026 is the key window for Senate review. Disagreements over stablecoin yield provisions remain the biggest obstacle, but recent shifts in the stance of Coinbase CEO and research from the White House Council of Economic Advisers have driven positive changes in the dynamics. The market generally believes that if the bill is passed, it will become a key catalyst for a rebound in the crypto market in the second half of 2026, with institutional inflows depending on the elimination of regulatory uncertainty; conversely, if the legislative window closes, Bitcoin may face a longer period of price adjustment and a reassessment of valuation.

Frequently Asked Questions

Q1: How does the CLARITY Act differ from the already passed GENIUS Act?

The GENIUS Act was signed into law by President Trump in July 2025 and mainly focuses on issuance and operational rules for USD-backed payment stablecoins, establishing a federal regulatory framework for stablecoins. The CLARITY Act covers all blockchain-linked digital assets; it transfers primary regulatory authority for cryptocurrencies other than stablecoins to the CFTC and, at the legal level, clearly defines the standards for the classification of digital assets and regulatory responsibilities.

Q2: What impact does the CLARITY Act have on the DeFi sector?

The bill takes a “regulating behavior rather than code” approach and applies differentiated treatment to non-custodial DeFi protocols. The draft provisions clearly exclude DeFi developers and self-custodied smart contracts from being recognized as deposit-taking institutions. The regulatory focus is concentrated on centralized intermediaries and stablecoin issuers. This means that developers of decentralized protocols will not be recognized as financial intermediaries merely for publishing code, preserving compliance space for DeFi innovation.

Q3: What does it mean for the crypto market if the bill is not passed?

If the bill is not passed within 2026, it could mean that the U.S. crypto industry may need to wait until the next congressional cycle in 2030 to see comprehensive market-structure legislation. During this period, the crypto industry will continue to face the ambiguous jurisdiction boundary between the SEC and the CFTC, and the compliance threshold for institutional capital inflows will be difficult to eliminate. The market’s valuation center of gravity could continue to be suppressed.