Galaxy Research has lowered its estimate for the likelihood of the CLARITY Act, which aims to regulate the structure of the cryptocurrency market in the US, becoming law by 2026 to 10 percent.
The assessment published by Galaxy Research states that expectations had previously risen that the bill, which is progressing with bipartisan support in the Senate Banking Committee, could pass the Senate before the August recess, but political disagreements and industry lobbying have slowed the process.
According to the research firm, one of the biggest obstacles to the bill was the lack of consensus on ethical guidelines for public officials’ activities in the cryptocurrency sector. Additionally, pressure from local banks, in particular, reportedly weakened support among some Republican senators.
It was noted that demands for further restrictions on the provisions of the Blockchain Regulatory Certainty Act, which includes protections for crypto developers, also complicated negotiations.
Galaxy Research reported that Senate Majority Leader John Thune failed to secure the 60 votes necessary to pass the filibuster and therefore did not proceed with a vote before the August recess. The bill is scheduled to be brought to the Senate’s attention when it resumes work in September.
However, according to Galaxy, the fact that the Senate session, which begins on September 14, will end in early October due to midterm election activities leaves an extremely narrow window for the bill to become law.
The company stated in its assessment, “CLARITY has now become less about policy content and more about political balances.”
Galaxy Research has therefore stated that the likelihood of the CLARITY Act becoming law in 2026 has been reduced to 10 percent.
SEC and CFTC Could Accelerate Regulatory Steps
The difficulty the Clarity Act is facing in Congress is prompting regulatory bodies in the US to accelerate their efforts to create new rules for the cryptocurrency market through administrative means.
According to Galaxy Research, the U.S. Securities and Exchange Commission (SEC) is preparing to implement two important regulatory exemptions that have been under consideration for some time.
Reg Crypto aims to create a new regulatory pathway for the initial public offering of crypto assets. Innovation Exemption, on the other hand, aims to establish a regulatory framework that will allow tokenized securities to be traded on the secondary market within decentralized finance protocols.
However, Galaxy noted that the SEC has backed down on both regulations several times due to pressure from the traditional financial sector.
According to the firm, the SEC’s recent renewed consideration of these regulations could be a sign that the agency believes the CLARITY Act has a significantly reduced chance of passing Congress.
Galaxy Research also stated that the Reg Crypto regulation is significantly linked to Title 1 of the CLARITY Act, and that the Innovation Exemption regulation directly overlaps with Section 10505 of the bill.
Galaxy Research noted that regulatory exemptions, interpretive guidance, and new rules that could be implemented by the SEC and CFTC could temporarily fill the legislative gap in Congress.
However, the company noted that such regulatory measures do not provide the same lasting legal protection as a law passed by Congress.
It was emphasized that a different administration that comes into power in the future could change or completely reverse these regulations.
Therefore, according to Galaxy, while regulatory actions may provide greater clarity in the short term regarding the issuance, trading, and market surveillance of crypto assets, they cannot replace a long-term market structure law to be created by Congress.
On the other hand, Galaxy Research stated that even if the CLARITY Act is not enacted, the SEC expects to release the text of Reg Crypto, the Innovation Exemption, or both, within the coming weeks or months.
*This is not investment advice.
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