Original | Odaily Planet Daily(@OdailyChina)
Author | jk
Since passing the House of Representatives on July 17, 2025, with a vote of 294 to 134, the Digital Asset Market Clarity Act (CLARITY Act) has been stalled in the Senate for over a year. The Senate Banking Committee voted 15 to 9 on May 14, 2026, to advance the bill to the legislative calendar, but as of now, the bill has not received a full Senate vote nor been signed by the President.
Where is the holdup? On this matter, Odaily Planet Daily has conducted a specific analysis. Interested readers can refer to "Just One Step Away, Where Exactly is the CLARITY Act Stuck?"
The core of this bill is to classify and define crypto assets: clarifying whether tokens are securities or commodities, and accordingly delineating the regulatory authority between the SEC and CFTC, while also covering regulations on user self-custody of private keys, stablecoin yield mechanisms, and registration of foreign exchanges. The main controversy currently obstructing a Senate vote is the ethics review clause targeting potential conflicts of interest regarding crypto assets held by senior government officials.
On July 27, Senate Majority Leader John Thune confirmed that the Senate would prioritize the Russia sanctions bill and personnel appointments in the near term, potentially pushing the voting window for the CLARITY Act back to September. Industry and congressional negotiating parties had generally viewed August 7 as the last realistic window for the bill's passage in 2026. Once missed, most analytical institutions believe the chances of the bill becoming law this year would diminish significantly.
Currently, Polymarket data shows the probability of the CLARITY Act being signed into law within the year is only 35%. Back in February, this number was 82%.
The probability of Clarity passing within the year has been trending lower. Source: Polymarket
So, if the Clarity Act indeed fails to pass, how will the crypto market react, what will happen to Bitcoin? How will related U.S. stock targets be impacted? And what changes will occur in the political landscape in Washington? Odaily Planet Daily will examine the possible scenarios the industry might face if the CLARITY Act ultimately fails to pass in the Senate from these three perspectives.
I. Crypto Market: Analysts Generally Believe Impact Limited, and Market Has Already Priced It In
Judging from current price action, the market's pessimism towards the CLARITY Act has been gradually reflected. The most direct indicator is the drop in probability on Polymarket from 82% to the current 35%. Looking at the trend, this probability had repeatedly risen above 70% between February and May but has been declining steadily since entering June, indicating a clear loss of confidence. Currently, cumulative trading volume has reached $2.845 million.
Bitcoin price itself has been under pressure recently, retreating to fluctuate around the $65k to $66k range in late July. Market interpretations generally link this to macro liquidity factors rather than the bill itself.
On the institutional side, most analysts reserve judgment on the view that "bill failure equates to an industry crisis." Compass Point Research & Trading analyst Ed Engel maintains a Sell rating on Coinbase, but he also points out that even if the CLARITY Act fails to pass, there are still enough industry events in the second half of the year to maintain market attention, and the blockchain industry still has the opportunity to prove its practical application value in the next two to three years.
It should be noted that the specific provisions of the bill itself are also subjects of significant controversy, and its direction has varying impacts on different sub-sectors. Taking the stablecoin yield clause as an example, a version of the CLARITY Act draft in March proposed banning any stablecoin holding arrangements that "substantially equate to interest." This news caused Circle's stock price to plummet 20% in a single day, with Coinbase's stock price falling nearly 10% on the same day. This means the impact of the bill's failure on the market largely depends on the final details of the provisions, rather than the passage of the bill itself.
II. U.S. Stock Market: Will Coinbase and Circle Crash?
Coinbase
Coinbase's performance over the past week. Source: Google
Coinbase's stock price has recently been under pressure as the probability of the bill passing has declined. On July 28, COIN closed at $165, down 3.8% over the past 5 days. The decline has been attributed to selling pressure stemming from the weakening prospects of the bill. In the week of July 24, COIN had once fallen from levels around $169. Raymond James set a target price of $158, approximately 6.5% lower than the stock price at the time; Oppenheimer had previously lowered its target price to $209. Baird lowered its target price from $160 to $142, maintaining a Neutral rating.
In other words, institutions believe that if CLARITY does not pass, we are likely to see Coinbase in the $140 - $160 range.
However, most analysts do not directly tie Coinbase's long-term investment thesis to the success or failure of the CLARITY Act. Analysis cited by TipRanks suggests that even if the bill fails to pass before August, the trend of institutional allocation to crypto assets on Wall Street will still support Coinbase's long-term growth. Coinbase is set to release its Q2 earnings report on July 30, with market expectations of EPS at $0.19, a significant improvement compared to the Q1 loss per share of $1.49. In the long run, if CLARITY fails, long-term growth could also offset this failure.
Circle
Circle's performance over the past week. Source: Google
Circle's situation is relatively more complex, with some analysts believing bill failure might not necessarily be bad for Circle. Mizuho Securities analysts noted that if the CLARITY Act passes smoothly and brings a clearer regulatory framework, it might actually attract more competitors into the stablecoin space, accelerating homogenized competition in the stablecoin business, which could lower Circle's revenue in the long run. The stablecoin sector has already seen the emergence of the Open USD project this year, backed by over 140 institutions including Visa, Mastercard, Stripe, and BlackRock, posing direct competition to Circle's USDC. Mizuho had previously downgraded its rating on Circle due to this project.
On the other hand, provisions in the CLARITY Act regarding stablecoin yield restrictions, if ultimately enacted, would weaken the high-margin revenue Coinbase obtains through its USDC distribution agreement, thereby shifting bargaining power towards Circle in the commercial agreement renegotiation scheduled for August 2026. Morgan Stanley analyst Thielen believes that a stricter federal regulatory framework generally benefits licensed issuers with compliance capabilities, asset scale, and credit backing, a scenario in which Circle stands to benefit relatively. Bitwise Chief Investment Officer Matt Hougan believes the previous sell-off in Circle's stock price triggered by the bill draft was "over-interpreted," and the bill itself does not change Circle's long-term investment thesis.
In other words, if CLARITY truly fails to pass, it might actually be good for Circle's long-term price. In the short term, if sentiment continues to weaken, several repeatedly mentioned support levels are around $61.70. In more extreme scenarios, the market has mentioned a possible retreat to the February low of $49 this year.
Crypto Treasury Companies
Crypto asset treasury companies, represented by Strategy (formerly MicroStrategy, ticker MSTR), have stock prices whose correlation with Bitcoin's price is far higher than any direct link to the CLARITY Act itself, essentially acting as leveraged plays on Bitcoin.
As of July 1, affected by Bitcoin's price falling below $59k, MSTR's stock price slid to the $85-$86 range, marking its eleventh consecutive month of decline, representing a retreat of approximately 84% from the historical high around $540 in November 2024. Citi analysts linked their baseline Bitcoin target of $100k to expectations of the CLARITY Act's passage, suggesting that if the bill lands smoothly and pushes Bitcoin to $100k, the value of Strategy's Bitcoin holdings would correspondingly rise to about $84 billion.
Strategy recently disclosed that its model calculates Bitcoin's annualized return floor at negative 11.34%. Once actual returns fall below this level, the company may need to consider restructuring its debt. Moreover, two listed companies had already sold a total of 511 Bitcoin within 24 hours to repay approximately $31.7 million in debt. This kind of financial pressure is relatively independent of the CLARITY Act's legislative progress but could be amplified in an environment where the bill is long-delayed and market sentiment is weak. Strategy is scheduled to release its Q2 earnings report during the week of July 30-31, with the market expecting its stock price volatility to further increase during this period.
III. Washington Political Landscape: Future Legislation Will Be Very Difficult
Looking at the Senate voting structure, whether the bill passes depends on securing support from 7 to 9 Democratic senators to surpass the 60-vote threshold. On the Republican side, Senators Josh Hawley and Rand Paul are expected to vote against the bill based on substantive stances, meaning even if all 53 Republican senators are present, it would not be enough to push the bill through alone. On the Democratic side, Arizona Senator Ruben Gallego is seen as a relatively stable source of supportive votes.
It's worth noting that the resistance within the Democratic Party is not solely about the crypto industry regulatory framework itself; it is largely connected to disclosures of over $1 billion in crypto asset-related investments by former President Trump and his family. Several Democratic senators view the ethics clause as a check on potential conflicts of interest for the President. Senator Angela Alsobrooks previously labeled a compromise proposal from the White House as "not a serious proposal." This has somewhat tied the legislative progress of the CLARITY Act to the larger goal of opposing Trump, rather than being purely a technical debate on industry regulation.
If the bill ultimately fails to pass in 2026, most analytical institutions believe this will not lead to a regulatory vacuum. Instead, it means the crypto industry will continue to rely on two existing paths in the short term: First, the GENIUS Act, which took effect in July 2025, currently specifically regulates payment stablecoins and their issuers; second, the respective regulatory agendas advanced by the SEC and CFTC, with the SEC's Regulation Crypto proposal expected to formally enter the rulemaking process in the second half of 2026.
From a timing perspective, the midterm elections in November 2026 are a key variable affecting the bill's subsequent progress. Most analyses believe that once the pre-recess window in August is missed, the possibility of the bill resuming consideration in the fall will be significantly compressed due to appropriation bill disputes and the approaching election cycle. Substantive advancement would likely have to wait until 2027, and 2027 itself is a phase of political reshuffling following the midterm elections, making the chance of the bill continuing with previous bipartisan consensus much lower. An alternative path proposed by some industry lobbyists is to incorporate the core provisions of the CLARITY Act into a must-pass comprehensive bill for year-end processing. However, as of now, no senator has publicly confirmed this strategy is being seriously considered.
