Author: Blockchain Knight
Yesterday, the U.S. Senate released its schedule for this week, but the Clarity Act (CLARITY Act) was nowhere to be found.
In its place was a procedural vote on another resolution. August 7th marks the start of the Senate recess, leaving the bill with only 72 hours.
The Senate's procedural hurdles are incredibly complex. The first step, filing a cloture petition, requires signatures from 16 senators. The second step, the vote itself, requires 60 votes. Even if all Republicans support it, they only have 53 votes, meaning at least 7 Democrats are needed.
It is precisely these 7 individuals who have stalled the bill for two months. The third step: if the vote passes, there is still a mandatory 30 hours of debate before a vote on "whether to proceed to consideration" of the bill.
If the 16 signatures are not secured by Wednesday Eastern Time, the bill won't even get the chance to be rejected. Even if the petition is filed on Wednesday, the earliest vote would be Friday, just as the recess begins, leaving no time to actually consider the bill itself.
The biggest sticking point remains the ethics provisions. The draft bill prohibits certain senior officials from issuing or sponsoring digital assets until 2029, but Democrats argue the enforcement loopholes are too large, with existing holdings and family arrangements not being effectively constrained.
As of now, the White House has not formally responded to the revised draft. The Trump family's considerable profits from crypto assets have further reduced Democrats' trust in the bill.
Furthermore, stablecoin rewards remain a powder keg. Banks argue the reward mechanism is akin to deposit interest, which could siphon funds away from the traditional banking system. Crypto firms see this as protecting banks from competition.
The current compromise prohibits passive interest but allows rewards for transactions, staking, and platform activities (this is partly why Ethena has performed well recently, as it stands to be a potential beneficiary if the bill passes).
Polymarket data shows the probability of the bill passing by 2026 has dropped to 31%, down another 7 percentage points from a week ago, and down 9 points over the past month. Related betting volume is approximately $3.7 million. Notably, this probability was 74% at the beginning of the year.
Investment firm Bernstein warned that if the Senate fails to advance the bill before the recess, it could trigger a 'sell-on-bad-news' market reaction, putting further pressure on Bitcoin and overall crypto asset valuations.
Grayscale urged the Senate last week to vote promptly, and Treasury Secretary Besant has also publicly called for action. Industry representatives have collectively contacted Congress over ten thousand times, but progress efficiency remains below expectations.
This Friday is the last working day before the recess. If this week is missed, the bill will be delayed until September, when the Senate schedule is busier and time for legislation is even harder to find with midterm elections approaching.
Democrats have indicated that if a procedural vote can be initiated this week, it would at least leave a glimmer of hope for action after the September return. But that glimmer of hope is shrinking by the hour.
Of course, if the bill is further delayed this week, market performance suggests that few are holding out much hope anymore. Conversely, if the low-probability event of 'passage' actually occurs, the market reaction could far exceed expectations.
Looking back at the rollout of past crypto-related bills, it seems none have faced such a difficult path, which also underscores the significance of this particular bill for the industry.
