ChainCatcher report: Galaxy Research analyst Alex Thorn notes that as the likelihood of the CLARITY Act passing in 2026 has significantly declined, the U.S. SEC and CFTC are accelerating independent regulatory actions on crypto. The bill previously enjoyed bipartisan support in the Senate Banking Committee but has stalled due to unresolved ethical rules for officials, pressure from community banks causing some Republican support to waver, and controversy over developer protection provisions. Senate Majority Leader failed to advance a vote before the August recess, and with only two to three weeks of session remaining in September, Galaxy has lowered the bill’s passage probability to 10%. On the SEC side, previously planned exemptions—“Reg Crypto,” which aimed to create a new pathway for primary offerings of crypto assets, and the “Innovation Exemption,” which would permit tokenized securities to trade on DeFi secondary markets—have been repeatedly delayed. Reports suggest the SEC retreated due to opposition from traditional securities firms, but may now be restarting these initiatives in light of the bill’s dim prospects, with draft texts expected to be released within the coming weeks to months. These measures are likely to be time-limited sandboxes, subject to litigation and requiring years to refine. Meanwhile, the CFTC is actively asserting jurisdiction over prediction market contracts, having issued an emergency order in response to the New York State Attorney General’s attempt to impose a nationwide ban on Kalshi’s event contracts, continuing the ongoing legal battle between federal and state authorities over jurisdiction in prediction markets. Thorn argues that while the bill originally encompassed a comprehensive framework covering registration, compliance monitoring, and consumer protection, it is now increasingly driven by political factors. The planned departure of SEC Commissioner Hester Peirce in November further increases the urgency to advance regulatory rules. These actions aim to fill the legislative vacuum, but will likely still undergo a prolonged process of judicial review and rulemaking.
Galaxy: The CLARITY Act's chance of passage drops to 10% as the SEC and CFTC accelerate independent regulatory actions
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Summary
Galaxy analyst Alex Thorn said the likelihood of the CLARITY Act passing has dropped to 10% in 2026 due to Senate delays. The SEC and CFTC are now accelerating separate actions. The SEC is revisiting "Reg Crypto" and the "Innovation Exemption," while the CFTC is asserting jurisdiction over prediction markets, citing CFTC concerns. Recent developments underscore growing tensions in liquidity and crypto markets as regulators act without legislative clarity.
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