CLARITY Act, formally known as the "Digital Asset Market Clarity Act of 2025," is currently the most comprehensive piece of crypto market structure legislation advancing through the US Congress. The bill was jointly introduced by the House Financial Services Committee and the Agriculture Committee on May 29, 2025. It passed the House on July 17 of the same year with 294 votes in favor and has since moved to the Senate for consideration.
The core objective of the bill is to resolve the longstanding regulatory ambiguity in the US digital asset market. Previously, unclear boundaries between the SEC and CFTC’s jurisdictions led to high compliance costs for businesses and stifled innovation. The CLARITY Act draws clear lines between SEC and CFTC oversight: most spot trading of eligible tokens will fall under the CFTC, while the SEC will continue to oversee initial public offerings, investor protection, and disclosure requirements. The bill introduces the concept of a "digital commodity," referring to digital assets whose value primarily depends on their utility within blockchain systems, explicitly excluding traditional securities and stablecoins. For major cryptocurrencies like Bitcoin, this classification path means they will likely fall under CFTC jurisdiction, subject to a more flexible, principles-based regulatory regime rather than the SEC’s strict disclosure and registration requirements.
Additionally, the bill establishes unified disclosure and conduct standards, requiring developers to provide standardized project information and imposing registration and oversight obligations on exchanges, brokers, and market makers. These provisions aim to replace the SEC’s prior "regulation by enforcement" approach with a clear statutory framework, offering responsible digital asset projects a viable path to compliance.
What Is the Current Legislative Progress and Passage Probability of the Bill?
On April 13, 2026, the US Senate returned from its Easter recess, marking the final legislative sprint for the CLARITY Act. The Senate Banking Committee has targeted a markup in late April. If this window is missed, the probability of passing the bill in 2026 drops to "extremely low."
Procedurally, before the bill can be signed into law, it must clear five steps: Banking Committee markup, passage by at least 60 votes in the full Senate, reconciliation with the Agriculture Committee’s version, coordination with the House’s July 2025 version, and finally, the President’s signature. All of this must be accomplished in less than two months. Market estimates of the bill’s passage probability vary widely. Ron Hammond, Head of Policy at Wintermute, puts the odds at about 30%; prediction market Kalshi shows slightly above 50%; Punchbowl’s survey of lobbyists reports 26%. Previously, Bitwise’s Matt Hougan revised his estimate down from 72% to 42%.
Senator Cynthia Lummis warned, "This is our last chance to pass the CLARITY Act before 2030." Congress will begin its Memorial Day recess on May 21. If the bill fails to make critical progress in the Senate before then, the legislative process could be drawn into the political cycle of the midterm elections, introducing even more uncertainty.
Why Has the Bill Encountered Resistance in the Senate?
The main obstacle is the issue of stablecoin yields. Banking groups worry that allowing stablecoin issuers to pay yields will trigger massive deposit outflows, threatening the stability of the traditional banking system. The current Tillis-Alsobrooks compromise framework centers on prohibiting crypto platforms from paying interest on simply holding stablecoin balances, but allows activity-based incentives and rewards tied to payments and platform usage. This means users cannot earn passive income merely by holding stablecoins, but can still earn yields through activities like on-chain lending or providing liquidity. This distinction addresses banks’ concerns over deposit flight while preserving room for DeFi innovation. However, the banking sector continues to push for a narrower definition of activity-based incentives, leaving room for negotiation over specific language.
Another hurdle is conflict-of-interest provisions. Democrats are pushing to restrict senior government officials, including the President and their families, from participating in certain crypto financial activities—a clause that has sparked partisan divisions in Congress. Coinbase CEO Brian Armstrong’s position shift—from stating in January that "no bill is better than a bad bill" to publicly supporting the legislation on April 10—reflects the evolving complexity of the negotiations. Market estimates suggest that stablecoins account for about 20% of Coinbase’s total revenue; Armstrong’s endorsement came after confirming that the bill would preserve space for activity-based incentives.
If Passed, How Would the Bill Reshape the Crypto Market?
From a market structure perspective, the CLARITY Act would have several far-reaching effects. In terms of asset classification, the bill would clearly define whether a digital asset is a "digital commodity" or a "digital security." According to JPMorgan analysis, major tokens like XRP, Solana, Litecoin, Dogecoin, and Chainlink could be classified as commodities, subject to the CFTC’s relatively relaxed regulatory framework, significantly reducing compliance burdens.
On the institutional access front, the bill would establish clear registration and custody standards for crypto intermediaries, enabling traditional financial institutions such as BNY Mellon and State Street to legally custody digital assets. The current fragmented and uncertain regulatory landscape has kept many large asset managers, banks, and pension funds on the sidelines due to legal and compliance risks. A comprehensive market structure law would greatly reduce this uncertainty, giving institutions the confidence to allocate to crypto at scale.
To support innovation, the bill allows new projects to raise up to $75 million per year during their transition to decentralization without full SEC registration, providing a crucial compliance buffer for US-based crypto startups. The bill also includes protections for software developers, explicitly stating that "developers who publish or maintain code without controlling customer funds are not considered financial intermediaries," offering legal certainty for open-source protocol developers.
How Are Major Institutions Assessing the Bill’s Market Impact?
JPMorgan’s analyst team believes US market structure legislation is most likely to be approved by mid-2026 and will serve as a positive catalyst for the crypto market in the second half of the year. JPMorgan has reiterated its long-term price target for Bitcoin at $266,000, a figure derived from a volatility-adjusted comparison with gold. Managing Director Nikolaos Panigirtzoglou noted, "Despite continued negative sentiment in the crypto market, we still believe that market structure legislation is likely to be approved by midyear, which could act as a positive catalyst for a crypto market rebound in the second half."
Citi, on the other hand, lowered its 12-month Bitcoin price target from $143,000 to $112,000 in March—a 21.7% reduction. Analyst Alex Saunders pointed out that the bill’s stalled progress in the Senate means the anticipated regulatory catalyst for a market repricing may not materialize in the short term. Citi’s optimistic scenario is $165,000 (if the bill passes and institutions accelerate entry), while the pessimistic scenario is $58,000 (if a macroeconomic downturn coincides with legislative failure). Bitwise CIO Matt Hougan lists the CLARITY Act as one of three key catalysts for Bitcoin to reach new all-time highs in 2026, alongside "no repeat of major liquidations like October 10" and "a stable stock market."
How Is the Market Pricing Legislative Uncertainty Based on Current Data?
As of April 14, 2026, Gate market data shows the Bitcoin price oscillating around the $70,000 range. Since Donald Trump’s election victory in November 2024, Bitcoin surged from about $70,000 to an all-time high of $126,000 in October 2025. However, since February 2026, amid the stalled progress of the CLARITY Act and other factors, Bitcoin has successively fallen below the $80,000 and $70,000 marks, briefly dipping to $60,000—a 16-month low—triggering over $2 billion in crypto liquidations across the market in just 24 hours.
Prediction platform Polymarket shows an 82% probability that Bitcoin will fall below $65,000 in 2026, with about a 60% chance of dropping below $55,000. This pricing pattern suggests the market is continuously pricing in the risk of legislative delays, rather than absorbing negative news all at once. If the bill eventually passes, this accumulated discount could quickly unwind as a positive price correction; if the bill fails to pass in 2026, the market may need to further recalibrate expectations for when regulatory benefits will be realized.
What Will Really Drive Bitcoin’s Next Rally?
Analysts generally agree that passage of the CLARITY Act itself is not a direct trigger for Bitcoin price appreciation, but rather clears regulatory hurdles for large-scale institutional capital to enter the market. JPMorgan’s analysis notes that the bill would bring regulatory clarity, end the "regulation by enforcement" era, drive asset tokenization, and encourage broader institutional participation, thereby reshaping market structure.
From a price driver perspective, there is a clear correlation between Bitcoin’s price action and legislative progress. Citi’s report suggests that until legislative progress becomes clear, Bitcoin is likely to consolidate around $70,000, with the market digesting uncertainty through sideways movement rather than launching a new rally. JPMorgan emphasizes that legislation could be the turning point investors have been waiting for: "The key is not just price appreciation, but the professionalization of the entire market structure, making the digital asset ecosystem more regulated, user-friendly, and attractive to a broader range of institutions."
It is important to note that the timing of the market’s response to legislation remains uncertain. Even if the bill is approved in mid-2026, substantive provisions will require implementing rules from the CFTC and other regulators, meaning institutional inflows may lag the legislative event itself. Additionally, changes in macro liquidity and the global economic environment will also have a profound impact on Bitcoin prices—legislation is just one variable among many.
Summary
The core value of the CLARITY Act lies in establishing a clear, enforceable statutory regulatory framework for the US digital asset market, putting an end to the "regulation by enforcement" dynamic caused by ambiguous SEC and CFTC jurisdiction. From a legislative perspective, April to May 2026 is the critical window for Senate passage, with stablecoin yield provisions remaining the biggest hurdle. However, recent shifts in Coinbase’s CEO’s stance and the White House Council of Economic Advisers’ research efforts have brought positive momentum to the negotiations. The market widely expects that, if passed, the bill will be a key catalyst for a crypto market rebound in the second half of 2026, with large-scale institutional inflows dependent on the removal of regulatory uncertainty. Conversely, if the legislative window closes, Bitcoin could face a prolonged period of price adjustment and valuation reset.
Frequently Asked Questions
Q1: How does the CLARITY Act differ from the already-enacted GENIUS Act?
The GENIUS Act, signed into law by President Trump in July 2025, focuses primarily on the issuance and operation of dollar-backed payment stablecoins, establishing a federal regulatory framework for stablecoins. In contrast, the CLARITY Act covers all blockchain-related digital assets, transfers primary regulatory authority over cryptocurrencies (excluding stablecoins) to the CFTC, and legally clarifies asset classification standards and regulatory responsibilities.
Q2: What is the impact of the CLARITY Act on DeFi?
The bill adopts a "regulate conduct, not code" approach, applying differentiated treatment to non-custodial DeFi protocols. The draft explicitly excludes DeFi developers and self-custodied smart contracts from being classified as deposit-taking institutions, focusing regulation on centralized intermediaries and stablecoin issuers. This means developers of decentralized protocols will not be deemed financial intermediaries simply for publishing code, preserving compliance space for DeFi innovation.
Q3: What would it mean for the crypto market if the bill fails to pass?
If the bill does not pass in 2026, the US crypto industry may have to wait until the next Congressional cycle in 2030 for comprehensive market structure legislation. In the meantime, the industry will continue to face ambiguous SEC and CFTC jurisdictional boundaries, high compliance barriers for institutional capital, and persistent downward pressure on market valuations.
