Senate summer recess threatens to deep-six CLARITY Act as Polymarket odds slide to 31% 🏖️

The US Senate's looming summer recess is clouding the near-term outlook for the Digital Asset Market Clarity Act (CLARITY), with prediction market odds of passage before the end of 2026 falling to 31%, down 7% in the past week and down 9% in the past month, according to Polymarket. Roughly $3.7 million has been wagered on that market. Wealth manager Bernstein warned that a failure to advance the bill could trigger an "industry knee-jerk reaction," potentially sending $BTC and the broader crypto market into another leg down. "From a tactical standpoint, we expect the crypto market to bottom and start showing momentum towards late Q3 and early Q4 prior to the mid-terms," Bernstein analysts wrote in a Monday report shared with Cointelegraph.

Even if Congress misses the window, Bernstein said regulators could pick up the slack. The firm expects the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) to pursue more proactive policy support if the bill stalls, including accelerated rulemaking under Project Crypto, a regulatory initiative first announced by SEC Chairman Paul Atkins in July 2025 and later expanded into a joint staff initiative between the SEC and CFTC in September 2025. The initiative is designed to create a workable regulatory framework for digital assets using existing agency authority while Congress finalizes crypto market legislation under the CLARITY Act. Bernstein said the two agencies could issue further interpretive guidance on token taxonomy, clarify rules for decentralized finance (DeFi), and accelerate the innovation exemption for issuing tokens that would be exempted from securities status during a finite period.

On Capitol Hill, White House officials are weighing a bipartisan ethics counterproposal received on Thursday, according to three sources familiar with the matter who spoke with crypto journalist Eleanor Terrett. The proposal, negotiated over weeks between Republican Senator Thom Tillis and Arizona Democrat Ruben Gallego, would allow state attorneys general to sue the Department of Justice if it fails to enforce ethics laws against federal officials. The CLARITY Act, which aims to establish the first regulatory framework for digital assets in the US, has drawn pushback from banking groups, including the American Bankers Association and state banking associations, which argue that the current draft would allow crypto firms to offer yields on stablecoins without facing the same requirements imposed on banks.