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All sides remain hopeful that the Clarity Act can be passed before the midterm elections, but the available timeline is tightening quickly.
Welcome to another edition of State of Crypto, CoinDesk’s newsletter exploring the intersection of digital assets and government policy.
The timeline pressure
The Clarity Act was not signed into law by July 4, despite earlier expectations from White House adviser Patrick Witt. With July already underway, the window to pass the legislation is narrowing significantly.
Why it matters
If Congress fails to approve the Clarity Act before the midterms, the bill’s future becomes uncertain. A shift in control of either chamber could lead to substantial revisions, particularly as Democrats may seek to reshape the legislation. As a result, the push for passage in 2026 is entering a critical phase.
Current outlook
Despite the time constraints, insiders are not ready to declare the bill dead. Several individuals close to the process said they remain cautiously optimistic that it can still pass this year.
Although Congress has a lighter summer schedule, much of the legislative work is happening behind the scenes. Staffers continue to meet to resolve outstanding issues, including reconciling differences between the Senate Agriculture and Senate Banking Committee versions of the bill. Once aligned, the Senate would only need a short session to debate and vote.
According to sources, the Senate process could move relatively quickly, potentially requiring just a few days to secure cloture and reach the 60 votes needed for passage. The House is also expected to act swiftly, though uncertainties remain.
Recent developments — including a U.S. Supreme Court ruling that expanded presidential authority over independent agencies, and new financial disclosures from Donald Trump — are not expected to significantly derail negotiations.
Political friction and ethics debate
Trump’s latest financial disclosure revealed approximately $2 billion in income for 2025, with roughly $1.4 billion tied to crypto-related ventures, including token sales and other digital asset activities. He also reported holding more than $100 million in cryptocurrencies.
The disclosure has intensified calls from Democrats for stricter ethics provisions within the Clarity Act. Senator Elizabeth Warren argued that the legislation must prevent top government officials and their families from profiting from the crypto industry.
Similarly, Senator Ruben Gallego reiterated his concerns about potential conflicts of interest, despite previously supporting the bill at the committee level. He emphasized the need for enforceable ethical safeguards before backing the bill on the Senate floor.
These concerns are not new. Lawmakers, including Angela Alsobrooks, have already made clear that stronger restrictions on officials’ crypto involvement are a prerequisite for broader support. Negotiations on these provisions are ongoing and expected to be finalized late in the process, with presidential approval still required.
Structural and legislative hurdles
Another complicating factor is the Supreme Court’s recent ruling allowing the president to remove independent agency commissioners more freely. Democrats have pushed for a bipartisan composition at regulators like the SEC and CFTC, a demand that remains part of negotiations.
Beyond policy disagreements, broader dysfunction in Congress may also slow progress. Reports indicate the House of Representatives is struggling to advance even procedural matters, raising concerns about its ability to act quickly on the Clarity Act.
Lawmakers are also juggling competing priorities, including a potential third reconciliation budget bill and other major legislation. Even if both chambers pass the bill, questions remain about whether Trump would sign it, given recent delays on other bipartisan measures.
Key date ahead
The next critical milestone is August 7, 2026, the final Senate session day before lawmakers leave for summer recess and campaign season. While Congress briefly returns in September, attention will likely shift to other priorities, such as the National Defense Authorization Act.
Bottom line
While optimism around the Clarity Act persists, time constraints, political tensions, and legislative gridlock are increasing the pressure. The coming weeks will be decisive in determining whether the bill can advance before the midterm elections.
