Wall Street broker Bernstein said failure to pass the Clarity Act this year would likely trigger another selloff in crypto markets, but argued U.S. regulators would respond by accelerating rulemaking to provide greater regulatory certainty for the industry.
The broker said in a note on Monday that prospects of the legislation passing have deteriorated as the Senate runs out of time before recess despite resolving contentious issues including stablecoin yield rules.
“Clarity is the most consequential crypto market structure bill in U.S. history, but the chances of its 2026 passing seems to be dwindling,” wrote analysts led by Gautam Chhugani in the Monday report.
A failure to pass the bill would likely prompt an immediate negative reaction across digital assets, the analysts said, although they argued the setback would probably be temporary as the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) expand rulemaking under President Donald Trump’s administration's Project Crypto initiative.
The Clarity Act is widely viewed as the crypto industry's most important piece of U.S. legislation, with supporters arguing it would establish clear rules for digital assets, reduce regulatory uncertainty and unlock broader institutional adoption. Analysts say passage would improve market sentiment by giving banks, asset managers and exchanges greater confidence to invest in blockchain infrastructure and expand crypto products.
Bernstein’s analysts said they expect regulators to move more quickly on token classifications, decentralized finance (DeFi) guidance, self-custody rules and innovation exemptions for token issuance, while continuing to support tokenization, crypto derivatives and prediction markets.
The Clarity Act remains strategically important because it would provide permanent regulatory certainty, encourage banks, broker-dealers and exchanges to invest in blockchain infrastructure, clarify the division between securities and commodities oversight and establish a long-term framework for decentralized finance and digital assets regardless of future political administrations, the report said.
Even if the legislation stalls, the broker expects the crypto industry's political influence to remain strong ahead of the U.S. midterm elections and sees the current downturn ending in late third or early fourth quarter, helped by the prospect of further White House policy support.
For listed companies, failure to pass the bill would preserve the status quo for stablecoin regulation.
Coinbase (COIN) would continue offering yield on idle stablecoin balances, while Circle (CRCL) would remain unable to do so directly as an issuer but could continue sharing distribution economics with partners. A recovery in USDC supply growth remains the key catalyst for renewed momentum in both stocks, the report added.
JPMorgan (JPM) warned last week that fading prospects for the Clarity Act to pass the U.S. Senate this year are a setback for crypto, saying further delays could undermine one of the industry's biggest regulatory catalysts.
Read more: JPMorgan says fading Clarity Act odds weigh on crypto outlook