Original | Odaily Planet Daily (@OdailyChina)
Author | Qin Xiaofeng (@QinXiaofeng 888 )
The much-anticipated Clarity for American Digital Assets Act (CLARITY Act) has unsurprisingly been delayed again. Senator Cynthia Lummis previously stated that negotiators expected to finalize the compromise text around July 4th (U.S. Independence Day) and "advance in July," but progress has clearly lagged.
Now, with the Senate's August 10th recess approaching, the window of opportunity is shrinking fast. The bill must achieve the 60-vote threshold in the Senate (requiring at least 7 Democratic defections), coordinate with the Senate Agriculture Committee's text, merge with the House bill, and receive the President's signature—all within the next 25 working days. The timeline is extremely tight.
If the bill misses the pre-recess window, the probability of the CLARITY Act passing this year will drop further. Indeed, data from the prediction market Polymarket shows the bill's chance of passage this year is only 40%; Galaxy Digital has also lowered its 2026 passage probability to 50%.
I. A Recap of the Latest Developments in the CLARITY Act
The CLARITY Act is landmark crypto market structure legislation being advanced by the U.S. Congress, aiming to clarify the regulatory boundaries between the SEC and CFTC, provide a non-security pathway for decentralized tokens, and require registration and AML obligations for digital commodity intermediaries.
On July 17, 2025, the House of Representatives passed the HR 3633 bill proposed by French Hill with a vote of 294 in favor and 134 opposed, with over 70 Democratic votes. On May 14, 2026, the Senate Banking Committee advanced and passed the bill with a 15-9 vote (supported by 13 Republicans and 2 Democrats). On June 1, 2026, the CLARITY Act was officially placed on the Senate legislative calendar (Calendar No. 423), qualifying for full floor consideration.
However, progress on the CLARITY Act throughout June was not smooth. On June 9, negotiations over ethics clauses related to presidential crypto holdings broke down, directly leading some Democratic senators to soften their stance or impose additional conditions, slowing the bill's pace towards floor debate. On June 10, the White House met with police and prosecutor groups. Subsequently, the enforcement battle over Section 604 (the developer protection clause) in the Blockchain Regulatory Certainty Act reached an impasse; without resolution, law enforcement groups might lobby against it, and Democratic senators might also vote 'no' for perceived "insufficient consumer protection/crime-fighting."
Simply put, the former is a "political/ethics threshold," and the latter is an "enforcement/security red line." Together, they constitute the final two major obstacles before the CLARITY Act can "clear" the Senate. If unresolved, it will be difficult to gather 60 votes and finalize the text, preventing completion of the legislative process before the August 10th recess. These two negotiations directly hindered the final advancement of the CLARITY Act, becoming the key "stumbling blocks" that caused the July 4th target to be missed and overall progress to stall. Negotiations are still attempting to break the ice, but time is extremely tight.
Brian Gardner, Chief Washington Policy Strategist at Stifel Financial, stated that for the bill to pass in 2026, "it likely needs to pass the Senate by the end of July, preferably in June," warning that if the Senate misses the recess deadline, the outlook would deteriorate significantly.
However, the market is not very hopeful about the bill passing this year. Alex Thorn, Head of Galaxy Research, lowered his 2026 passage prediction for the bill from 75% to 60% on June 5, citing the Senate's increasingly crowded agenda. Data from the prediction market Polymarket shows the bill's chance of passage this year is only 40%.
II. What Happens to Crypto if the CLARITY Act Fails to Pass on Schedule?
According to CCN's analysis, if the CLARITY Act fails to pass before the August recess, the most likely market reaction is not a crash but a "slow bleed through premium products." In fact, crypto's poor performance throughout June already indicates the market has begun repricing for legislative uncertainty. (Odaily Note: Here, "premium products" mainly refer to various spot ETFs.)
Data shows that throughout June, U.S. Bitcoin spot ETFs saw cumulative net outflows of approximately $4.5 billion, equivalent to about 77,000 BTC redeemed. This is the largest monthly net outflow since the product's launch in January 2024, exceeding the previous record from February 2025 (~$3.56 billion) and setting the worst monthly record yet.
In fact, XRP might be one of the assets most directly and significantly impacted by the bill, as it would permanently cement its commodity classification, eliminating the risk of reversible agency interpretation. If delayed long-term or fails, XRP could lose some of its "regulatory tailwind premium."
Geoffrey Kendrick, Global Head of Digital Assets Research at Standard Chartered, projects an XRP price target of $8, contingent on the Senate fully passing the relevant bill and $4-8 billion of ETF inflows. JPMorgan predicts that if the bill passes, XRP ETFs could see $4.3-$8.4 billion inflows in the first year. Data shows that since the launch of XRP spot ETFs in November 2025, cumulative net inflows are about $1.41 billion, with 84% from retail; institutional inflows still await clear regulatory signals.
For Bitcoin, which was classified as a commodity via the joint SEC-CFTC interpretation in March 2026, the CLARITY Act's main role is to codify this reversible decision into permanent federal law. Even if the bill fails or is long delayed, Bitcoin's "digital gold" narrative is relatively robust, facing less direct impact.
The impact on ETH is similar to Bitcoin, as Ethereum was also classified as a commodity via joint interpretation. Bill failure could leave DeFi protocols facing prolonged compliance ambiguity longer, dampening innovation and capital inflows. Standard Chartered's Geoffrey Kendrick projects a year-end 2026 ETH target of $7,500 (later revised to $4,000), contingent on the relevant bill's passage.
Kristin Smith, President of the Solana Foundation Policy Institute, stated that many asset allocators are actively exploring digital asset investments but are holding back capital due to unclear regulatory guidelines. The same logic applies to institutional DeFi; currently, DeFi projects are also on hold awaiting the outcome of Section 604.
III. Where Do We Go From Here?
Time is running short for the CLARITY Act to break through. The following scenarios are possible:
- First, Passage Before the August Recess: The biggest catalyst, potentially triggering a significant price rebound, especially for XRP and related ETFs.
- Second, Postponement to 2027: The scenario the market least wants to see, extending the "slow bleed" process and keeping institutional capital on the sidelines.
- Third, Failure and Pushing to the Next Congress: The CLARITY Act is currently in the 119th Congress. If it fails to complete Senate floor vote, reconciliation, and final passage before the August 2026 recess, the entire process cannot conclude within this Congress. When the new Congress (120th, 2027-2028) begins, the bill must be reintroduced and go through the entire committee review, floor debate, etc., process again.
The CLARITY Act is currently at a critical "on the brink but stuck" stage—technically on the Senate calendar, but political negotiations, time windows, and bipartisan support remain the biggest obstacles.
However, as Vincent Chok, CEO of First Digital, stated: "The CLARITY Act reaching the Senate floor vote itself shows the U.S. is closer than ever to resolving regulatory ambiguity... A successful vote would accelerate this process, but failure won't necessarily stop it. In fact, delays in the U.S. framework could create urgency and extend the time window for setting global standards, with the U.S. potentially becoming the de facto global digital asset hub."
