Bernstein believes a failure to pass the CLARITY Act this year could trigger another decline across crypto markets, although the brokerage expects U.S. regulators to speed up policy efforts to bring more certainty to the sector.
In a note published Monday, Wall Street firm Bernstein said the chances of the legislation moving forward have weakened as the Senate approaches its recess deadline, even after lawmakers resolved several disputed areas, including rules surrounding stablecoin yields.
“CLARITY is the most significant crypto market structure legislation in U.S. history, but the likelihood of passage in 2026 appears to be fading,” analysts led by Gautam Chhugani wrote in the report.
According to Bernstein, a failure to advance the bill would likely cause an immediate negative response from digital asset markets. However, the firm expects the impact to be short-lived, as the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) could accelerate regulatory initiatives under President Donald Trump’s Project Crypto program.
The CLARITY Act is considered by many in the crypto industry to be a landmark regulatory proposal. Supporters say the bill would create clearer rules for digital assets, reduce uncertainty, and encourage greater participation from institutional investors. Analysts argue that approval would give banks, asset managers, and exchanges more confidence to expand blockchain investments and develop new crypto-related products.
Bernstein analysts said they expect regulators to continue advancing policies covering token classifications, decentralized finance (DeFi) oversight, self-custody protections, and exemptions designed to support innovation in token issuance. They also anticipate continued regulatory support for areas such as tokenization, crypto derivatives, and prediction markets.
The brokerage emphasized that the CLARITY Act remains important because it would establish a long-term regulatory framework for digital assets, define the roles of securities and commodities regulators, encourage financial institutions to invest in blockchain infrastructure, and provide more certainty for decentralized finance regardless of future political changes.
Even if lawmakers fail to approve the legislation, Bernstein expects the crypto industry to maintain strong political influence heading into the U.S. midterm elections. The firm also believes the current market weakness could fade by late Q3 or early Q4 as expectations for additional White House support continue.
For publicly traded crypto companies, a stalled bill would likely leave stablecoin regulations unchanged.
Bernstein said Coinbase (COIN) would likely continue offering rewards on idle stablecoin balances, while Circle (CRCL) would remain unable to provide such services directly as an issuer but could maintain revenue-sharing arrangements with distribution partners. The firm added that renewed growth in USDC supply would be a major catalyst for both companies.
JPMorgan issued a similar warning last week, saying reduced chances of CLARITY Act passage this year represent a setback for the crypto sector and that prolonged delays could weaken one of the industry’s biggest regulatory catalysts.
