CLARITY Act Loses Momentum

The CLARITY Act’s chances of advancing through the Senate weakened sharply Tuesday after Republicans rejected a Democratic counterproposal, leaving negotiations unresolved just hours before an important procedural vote.

The two sides remain far apart on the crypto market structure legislation. Sen. Cynthia Lummis (R-Wyo.), a key Republican negotiator, said the Democratic offer contained little new compared with the positions lawmakers held before the August recess.

Lummis said Republicans had made substantial concessions during negotiations, including accepting nearly all of the Tillis-Gallego ethics framework. She argued that Democrats had not made comparable moves and urged them to enter meaningful negotiations rather than repeat their previous demands.

Prediction Markets Cut Passage Odds

The stalled negotiations prompted prediction markets to sharply reduce their expectations for the bill.

Polymarket traders gave the CLARITY Act only a 14% chance of becoming law in 2026 on Tuesday morning, down from approximately 30% around 24 hours earlier.

Kalshi also showed declining confidence in a near-term breakthrough. The probability of a crypto market structure bill becoming law before Oct. 1, 2027, dropped to 36%, compared with roughly 53% on Monday morning.

The expected timeline has shifted further into the future. On Monday, Kalshi traders assigned a 53% chance to passage before July 1, 2027. By Tuesday, they gave the CLARITY Act or another qualifying crypto market structure bill a 51% probability of becoming law by Jan. 1, 2028.

Monday’s Optimism Disappears

The sudden deterioration followed a surge in prediction-market confidence Monday, when traders expected Republican concessions to help end the Senate’s months-long stalemate.

That optimism faded after banking groups urged lawmakers to strengthen restrictions on stablecoin interest and reward programs. A bipartisan group of state attorneys general also warned that the bill could weaken states’ authority to combat fraud involving digital assets.

Republicans unveiled what they called their final draft over the weekend after making more than 100 changes sought by Democrats. The revisions included concessions related to ethics provisions.

The Senate is set to vote Tuesday afternoon on whether to invoke cloture on the motion to proceed. The procedural vote requires 60 votes, meaning the bill will need enough bipartisan support to clear the hurdle.