Key Takeaways
- Investment bank TD Cowen conveys downbeat view on Clarity Act ahead of August enactment
- The Senate is set to return on the first week of June, while the Agriculture and Banking Committee’s consolidation of the bill is underway.
Declining Possibilities
In a note dated May 26, Managing Director Jarrett Saiburgh of the Washington Research Group at investment bank TD Cowen, said that the political environment surrounding the “Clarity Act”, or the U.S. cryptocurrency market structure bill, is deteriorating. She said that it is unlikely that the passage of the bill into law before the August summer Senate recess will be hard. The Block and others reported on what is contained in the note.
Due to mounting uncertainty surrounding the Clarity Act, bitcoin (BTC) fell from May 26 to 27, momentarily dipping below $75,000. With the yield on the US 10-year Treasury staying within the vicinity of around 4.48–4.57% and the 30-year yield around 5%, the cryptocurrency market has been affected by the outflow of funds from risk assets.
The Senate Banking Committee passed the Clarity Act on May 15 despite opposition from Democrats and the banking industry.
However, Saburgh pointed out that being approved by the committee does not mean the agreement is reached, but rather that the arena has shifted to the Senate plenary, stating, “The environment in which Democrats vote in favor of the Clarity Act has become even more difficult.”
Three Impediments to the Democratic Party’s Support
According to Saburgh, there are three factors that drive away support from the Democratic Party. The first is that President Trump and the Internal Revenue Service (IRS) have settled and the lawsuit has resulted in a $1.776 billion settlement that has been established into an “Anti-Weaponization Fund” for victims of government misconduct. Included in the settlement is a clause permanently banning IRS audits of the Trump family’s past tax filings. “There has never been a precedent for such a taxpayer-funded fund,” said Mr. Saberg.
Second, The New York Times reported that the cryptocurrency industry and the prediction markets had been pushed to influence the Commodity Futures Trading Commission (CFTC). This move has resulted in the removal of experienced regulators. Michael Selig, CFTC chairman, explained to The New York Times that the CFTC does not tolerate serious misconduct and does not favor certain industries.
Third, it has been found that 3,600 stock transactions as shown on government asset disclosure materials were made on behalf of President Trump, revealing that some of the transactions coincide with the timing of Trump’s statements about companies and policies, according to Saburgh. The President and his family were not part of the deal, the White House claims.
“Unless the conflict of interest criteria applicable to the president are included in the bill, it is politically difficult for Democrats to support cryptocurrency legislation,” Mr. Saberg emphasized.
There is currently a 57% probability that the Clarity Act will be pushed into law this 2026, according to the prediction market Polymarket, with the chances of implementation still close to 50%.
Deadline for Bill to Passed Will In Effect Be August
Eleanor Terrett, a reported specializing in cryptocurrency policy, reported on May 23 that after her Senate reopening during the first week of June several priority items—including bills on housing, farming , and the FISA renewal deadline of June 12—are competing with the Clarity Act and for time during Senate plenary deliberations.
Staff-level work to integrate the Senate Agriculture Committee and Banking Committee bills continues, even during the congressional recess from May 25 to 29 for the U.S. Memorial Day holiday. As technical drafting, it is progressing toward resuming deliberations during the first week of June 1. However, there are doubts whether the Senate version can be passed before the summer recess in August if the Senate deliberations are delayed until July.
Mr. Saberg says in his analysis that if passage becomes difficult this year, legislation could be postponed until after 2027, and the final rule could take effect until 2029.
The bill needs the support of at least seven Democratic lawmakers if it is to secure the 60 votes needed to avoid filibusters. If Republicans continue to reject the ethical amendments requested by the Democrats, it will be nearly impossible for the White House to pass the Clarity Act by July 4.
