Galaxy Digital now believes the Digital Asset Market Clarity (CLARITY) Act has only a 10% chance of becoming law by 2026, sharply cutting its earlier expectations amid mounting political friction and an increasingly tight legislative calendar in the United States Senate.
The firm’s head of firmwide research, Alex Thorn, said the downgrade reflects a combination of unresolved policy disputes and an extremely narrow window for the Senate to act once lawmakers return from recess on September 14. According to Thorn, unless senators move immediately to hold a motion-to-proceed vote when they reconvene, there will be just two to three workable weeks in which the bill could advance – and only if it effectively “monopolizes” the chamber’s agenda for that entire stretch.
Galaxy’s latest move marks the third downward revision in less than three months. The company initially placed the odds of passage at 75% on May 22. That figure was cut to 60% on June 6, then to 50% on June 26. The new 10% call signals a dramatic loss of confidence in the political viability of the bill despite strong industry support.
At the heart of the stalemate are several issues Thorn describes as politically sensitive and far from resolved. One major sticking point is the question of ethics rules for public officials who engage with or invest in digital assets. Lawmakers are wary of appearing conflicted or unduly influenced by the sector they are meant to regulate, and no consensus has yet emerged on what kinds of restrictions or disclosures should be required.
Another source of friction is the treatment of stablecoin yields. Banks have pushed back aggressively on provisions they view as granting crypto firms a regulatory advantage, particularly around the ability to offer interest-like returns on stablecoins without being subject to the same capital, liquidity and supervisory standards that traditional financial institutions must meet. This “yield gap” is a central reason much of the banking sector has aligned with Democratic skeptics of the bill.
Developer protections add yet another layer of complexity. Some policymakers want stronger safeguards for software developers and open-source contributors, ensuring they are not treated as financial intermediaries simply for publishing code. Critics worry that broad exemptions could create loopholes for bad actors, while supporters argue that without such protections, US-based innovation in decentralized finance and blockchain infrastructure will migrate overseas.
Despite these tensions, the CLARITY Act remains one of the most ambitious attempts to date to build a comprehensive regulatory framework for digital assets in the United States. The legislation seeks to define the roles of key agencies, outline what constitutes a digital commodity versus a security, and set ground rules for stablecoin issuance and crypto market structure. Backers present it as a path to legal certainty after years of overlapping and sometimes conflicting enforcement actions.
The bill made its first major institutional breakthrough in May, when it cleared the Senate Banking Committee. However, that procedural win underscored how polarizing the proposal has become. Most Democrats on the committee opposed it, echoing concerns from the banking sector that the measure would effectively authorize crypto platforms to operate quasi-banking businesses – especially through yield-bearing stablecoin products – without comparable oversight or consumer protections.
Industry players, however, have rallied behind the legislation. At the start of June, more than 200 crypto companies and organizations signed a letter urging the Senate to move the CLARITY Act forward, arguing that clear, tailored rules are essential for the United States to remain competitive in the global digital asset economy. They contend that a lack of legislative clarity forces businesses to interpret regulation through enforcement actions, court battles and shifting administrative guidance, which raises costs and deters long-term investment.
Galaxy’s latest probability cut highlights the widening gap between the aspirations of the crypto sector and the realities of US politics in an election-driven environment. As Thorn notes, the Senate is juggling appropriations, judicial and executive nominations, national security priorities and election-related concerns, all of which compete for scarce floor time. For a complex, controversial bill like CLARITY to move, party leaders would have to devote sustained attention and political capital to shepherd it through, which appears increasingly unlikely before the next major political cycle fully kicks in.
The tightening legislative calendar is particularly problematic for a bill as technically dense as CLARITY. Even with broad agreement, translating novel concepts like token classifications, decentralized protocols and algorithmic stablecoins into statutory language would require extensive debate and amendment. With several core issues still unresolved, any last-minute push risks opening new fault lines rather than building consensus.
For the crypto industry, a 10% probability does not mean the effort is dead, but it does suggest that near-term strategic focus may shift. Instead of betting heavily on a single comprehensive bill, firms may concentrate on narrower pieces of legislation, regulatory sandboxes or rulemaking initiatives within existing agencies. Stablecoin-specific laws, custody rules for financial institutions and tax reporting refinements are likely candidates for incremental progress even if CLARITY stalls.
At the same time, the political resistance to stablecoin yields and bank competition offers a preview of the regulatory landscape companies should prepare for. It is increasingly clear that any US framework that touches stablecoin interest-like products will need to address banking sector concerns head-on. That could mean stricter reserve requirements, limits on who may issue or distribute yield-bearing stablecoins, or explicit guardrails tying such products to insured depository institutions.
The unresolved ethics debate also carries long-term implications. Future crypto legislation may be bundled with broader financial ethics reforms, including stricter rules on asset disclosure, trading blackout periods and the use of blind trusts by lawmakers and senior officials. For digital asset businesses, that would likely reduce informal political access while making lobbying and advocacy efforts more transparent and procedural.
Developer protections, if not secured in CLARITY, will remain a central battleground. Innovators argue that treating open-source contributors and protocol developers like regulated intermediaries would chill experimentation and drive talent abroad. Opponents worry that too much leniency could make it easier to launch unregistered securities or complex, high-risk products under the guise of “just writing code.” Any future compromise may hinge on distinguishing between those who merely publish tools and those who actively control or promote financial schemes.
For investors and market participants, Galaxy’s revised odds are a signal to temper assumptions about near-term regulatory clarity in the United States. Portfolio strategies that relied on a swift, favorable legislative outcome may need to be recalibrated to account for a prolonged period of piecemeal guidance, court-driven precedent and state-level experimentation. Longer regulatory timelines typically translate into higher compliance and legal costs, as well as greater uncertainty in valuations for infrastructure tokens, exchange businesses and stablecoin issuers.
Internationally, the US slowdown creates a window for other jurisdictions to shape the global rulebook. Regions that are moving faster on comprehensive crypto regimes may attract capital, exchanges and developers looking for predictability. Over time, foreign frameworks could become the de facto global standard, forcing US lawmakers to react from a position of catch-up rather than leadership.
Still, the underlying drivers that prompted the CLARITY Act have not disappeared. Institutional interest in digital assets, demand for programmable money and the growth of tokenized financial products continue to increase. Whether through CLARITY or a different legislative vehicle, the pressure on Congress to eventually define coherent rules for this sector will persist.
Galaxy’s 10% forecast therefore reads less like a verdict on the merits of crypto regulation and more like a commentary on timing and political bandwidth. The message is that while comprehensive reform remains necessary, its path will likely be slower, more fragmented and more contested than many in the industry had hoped earlier this year.