Galaxy Digital reduces CLARITY Act passage probability to 60% amid dwindling timeline
According to Galaxy Digital, the Senate faces a compressed schedule before November's elections, leaving diminishing time to refine and approve the crucial cryptocurrency legislation.
Digital asset company Galaxy Digital has decreased its probability estimate for Senate passage of the crypto market structure legislation before year-end, citing a narrowing opportunity for legislative action on the measure.
"On May 22, we raised our estimate of the probability that the CLARITY Act becomes law in 2026 to 75%, up from the 55% we published the morning of May 14's Senate Banking markup, Galaxy's head of research Alex Thorn said in a note on Friday. "We are now lowering that estimate to 60%."
According to Thorn, the legislation needs to clear the Senate prior to a month-long August recess that begins in late July, since "after that, the window effectively closes." He noted that historically, significant legislation has not advanced in the period leading to midterm elections as lawmakers focus on their campaigns.
Numerous Senate lawmakers have been advocating for the chamber to approve the legislation following the House's passage of its version, known as the CLARITY Act, last year.
Both the Senate Agriculture and Banking Committees have approved their respective versions of the legislation, which now requires a minimum of 60 votes on the Senate floor to advance without extended debate.
"For a 60-vote bill that still needs floor debate, an amendment process, reconciliation with the Senate Agriculture text, and then House action on the changes, Majority Leader [John] Thune realistically needs to schedule floor time at some point in July," Thorn said.
"Anything later and the procedural steps do not fit before the recess," he added.
According to Thorn, Galaxy reduced its probability estimate for another reason: there is no evidence showing progress on the legislation or surrounding negotiations, with provisions concerning ethics and illicit finance remaining as unresolved obstacles.
He stated that Galaxy would adjust its probability estimate if Senate leadership made a commitment to passing the legislation next month and if provisions aimed at securing lawmaker support were finalized.
The latest probability estimate from Galaxy follows Wednesday's analysis from JPMorgan analysts, who indicated they see below a 50% probability that the CLARITY Act will pass this year, also pointing to the tightening congressional calendar before the elections.
At the same time, Matt Hougan, Bitwise investment chief, stated on Tuesday that his perspective on the bill's passage this year is "less optimistic," and that "D.C. insiders" with whom he consulted estimated the probability of passage between 5% and 30%.
Cynthia Lummis, Senator and chair of the Senate Banking Subcommittee on Digital Assets, has intensified her push for Senate passage of the legislation, posting at least 15 times on X about the bill in June alone.
"The Clarity Act passed committee. The floor is next. We did not come this far to quit at the 5 yard line," she posted on Sunday.
In an interview with CNBC on Wednesday, Lummis stated that lawmakers involved with the legislation are working to resolve concerns, including those related to ethics and illicit finance, which could result in lost support during a floor vote.