The CLARITY Act, the crypto industry’s largest bill in Congress, is losing momentum just weeks after passing a key Senate committee, raising the risk that Washington’s first major digital asset rulebook will sink deeper into an election year.
Galaxy Digital lowered its estimate that the CLARITY Act will become law in 2026 from 75% to 60%, citing a shrinking Senate calendar and little visible progress on unresolved battles over ethics and illegal financing.
JPMorgan analysts in particular issued a similar warning this week, saying the legislative window has narrowed as lawmakers move closer to the midterm elections.
The reduction marks a turnaround for a bill that recently appeared to have its clearest path yet. The CLARITY Act cleared the Senate Banking Committee on May 14 on a 15-9 vote.
The CLARITY Act is the crypto industry’s central legislative priority because it would create the first comprehensive federal framework for digital assets in the US.
Supporters say it would clarify when cryptocurrencies fall under the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC), replacing years of enforcement-driven policies with clearer rules for issuers, exchanges and investors.
But the legislation must still be passed by the full Senate, aligned with House legislation and signed by the president.
That series is becoming increasingly difficult to fit into a busy summer schedule.
The Senate agenda is against the bill
In a recent note to clients, Galaxy explained that the revised estimate is based primarily on timing and not on a collapse in support for the bill.
Alex Thorn, the firm’s head of research, pointed out that the Senate is running out of useful days before the August recess, which would begin in late July.
According to him, the bill still needs to go through a number of procedural steps before it can become law. This includes needing to get 60 votes in the Senate, go through floor debate and amendments, be aligned with a separate text from the Senate Agriculture Committee, and then pass the House.
This means Senate Majority Leader John Thune will likely have to schedule speaking time in July to allow that process to unfold before lawmakers leave Washington.
However, available time has shrunk over the past two weeks as the Senate lost time in a fight over the administration’s anti-weaponization fund, which took up floor space while work on a funding package for ICE and the Border Patrol.
The House also failed to advance the reauthorization of Section 702 of the Foreign Intelligence Surveillance Act in a 47-52 procedural vote, setting up another battle before the oversight authority expires on June 12.
That creates a practical problem for a bill that still needs bipartisan support. Senate leaders have little reason to spend a week of scarce speaking time on legislation unless they think the votes are ready.
The outstanding issues remain substantial. Democrats led by Senator Ruben Gallego have pushed for ethics provisions related to conflicts of interest. Illegal financial hawks want stronger safeguards against money laundering and the risks of sanctions. The Senate Banking and Agriculture committees also still need to unify their approaches.
JPMorgan analysts led by Nikolaos Panigirtzoglou said the interim calendar could delay progress on crypto market structure reform this year.
Meanwhile, timing could also affect the final deal, because a compromise reached before the election could look different from one negotiated afterward, when political incentives and control of Congress could shift.
Banks continue to put pressure on returns on stablecoins
The calendar issue collides with the banks’ ongoing battle over stablecoins, the digital tokens designed to track the dollar and move across blockchain networks.
For banks, the most sensitive question is whether crypto companies can offer returns on stablecoin balances.
Banking groups have warned that interest-like payments on digital dollars could divert money from checking and savings accounts, while bypassing rules governing regulated banks.
CryptoSlate previously reported that the bill was intended to ban passive yield, meaning payments are made simply for holding stablecoins. However, the legislation would still allow rewards related to activities, such as payments, transactions, loyalty programs and trading incentives.
The distinction could determine whether stablecoins remain payment and settlement instruments or become substitutes for bank deposits.
Crypto companies have pushed for flexibility, arguing that activity-based rewards are part of payments innovation and consumer adoption.
The industry says overly strict limits would shield banks from competition and reduce the appeal of digital dollar products that can settle payments faster than traditional payment systems.
Banks counter that issuers of stablecoins and crypto platforms should not offer bank-like products without bank-like obligations.
In fact, a survey sponsored by the American Bankers Association (ABA) recently stated that “consumers strongly support protecting local lending and the financial system from the risks associated with allowing interest-like rewards on stablecoins.”
That argument has gained political momentum as stablecoins grow into a bigger part of digital finance and as major exchanges seek new ways to convert customer balances into payment activity, trading incentives and yield-related products.
Essentially, this dispute remains one of the biggest obstacles to advancing legislation as bankers and crypto executives lobby for their own benefit.
What’s next for the CLARITY Act?
Galaxy Digital argued that the bill’s trajectory could improve if Senate leadership commits to speaking hours in early to mid-July, if lawmakers bridge the ethical and illegal financial differences, and if the banking and agriculture committees come up with a combined package ready for debate.
These signals would show that the bill has both the votes and agenda space needed to move.
Without them, the path likely shifts to September, when campaign politics and a crowded fall agenda could reshape the bill or push it to another Congress.
For now, the CLARITY Act remains alive, but weakened. His chances have diminished because the Senate is running out of time, banks are still fighting over digital dollars, and the crypto industry has just a few weeks to prove the bill can clean up Washington before electoral politics takes over.