Senate Standoff Weighs on CLARITY Act
The outlook for the CLARITY Act deteriorated Tuesday as Senate Republicans and Democrats remained divided over the crypto market structure bill ahead of a closely watched procedural vote.
Republicans rejected a counterproposal from Democrats, leaving negotiations at an impasse only hours before senators were due to consider whether the legislation could move forward.
Sen. Cynthia Lummis (R-Wyo.), a prominent Republican involved in the negotiations, criticized the Democratic proposal for failing to meaningfully change the positions lawmakers held before the August recess.
In a statement shared with CoinDesk, Lummis said Democrats’ latest offer was essentially the same as their initial position. She argued that Republicans had made substantial concessions on multiple issues, including accepting almost all of the Tillis-Gallego ethics framework, while Democrats had not made similar compromises.
Lummis said Democrats would need to engage in actual negotiations rather than repeat previous demands and present them as new progress.
Polymarket Odds Drop to 14%
The political uncertainty was quickly reflected in prediction markets. Polymarket traders assigned just a 14% chance Tuesday morning that the CLARITY Act would become law in 2026, sharply below the approximately 30% probability seen around 24 hours earlier.
Kalshi showed a similar deterioration in sentiment. The probability of a crypto market structure bill becoming law before Oct. 1, 2027, declined to 36% Tuesday from roughly 53% on Monday morning.
The market’s longer-term expectations also shifted. On Monday, Kalshi traders gave the legislation a 53% chance of passing before July 1, 2027. By Tuesday, traders instead assigned a 51% probability that the CLARITY Act or another qualifying crypto market structure bill would become law by Jan. 1, 2028.
Monday’s Optimism Quickly Fades
The sharp reversal came after prediction markets had rallied Monday on expectations that Republican concessions might help resolve the prolonged Senate deadlock.
Those hopes weakened as banking groups pushed for stronger restrictions on stablecoin interest and reward programs. Separately, a bipartisan coalition of state attorneys general warned lawmakers that the proposed legislation could undermine states’ authority to combat fraud linked to cryptocurrencies.
Republicans released what they described as their final version of the bill over the weekend after making more than 100 changes sought by Democrats. The revisions included concessions related to ethics rules.
The Senate is scheduled to vote Tuesday afternoon on whether to invoke cloture on the motion to proceed. The measure requires 60 votes, leaving the bill dependent on sufficient bipartisan support to clear the procedural hurdle.
