Senate Deadline for CLARITY; Bitwise Says Delay May Lift Crypto

The Senate faces a narrowing window to file for cloture by Wednesday if leaders want to preserve a chance to vote on the CLARITY Act before lawmakers leave for a state work period that begins Aug. 10. Lawmakers are scheduled to depart this week for a recess that runs until mid-September.

Bitwise Chief Investment Officer Matt Hougan wrote that an immediate passage would be positive for markets, but a decisive defeat or clear delay could also remove regulatory uncertainty that has kept some investors on the sidelines. He argued that months of unresolved negotiations would prolong that uncertainty.

To advance the bill to a Senate floor vote, supporters need to secure 60 votes to overcome procedural hurdles. The House approved the measure 294-134 in July 2025. The Senate Banking Committee approved an amended version 15-9 in May, but divisions remain in the full Senate over ethics, investor protections and enforcement language.

The CLARITY Act would assign oversight of digital assets between the Securities and Exchange Commission and the Commodity Futures Trading Commission, impose disclosure and resale limits for certain tokens, and extend Bank Secrecy Act requirements to major crypto intermediaries. A July revision added a restriction barring the president, vice president and certain other officials from issuing or sponsoring digital assets until January 2029.

Senator Elizabeth Warren described the revised ethics language as containing “massive loopholes” and warned it would not prevent officials from profiting through existing assets or new structures. Other critics said the bill could weaken investor protections and leave enforcement gaps. Republicans counter that the bill preserves the SEC’s antifraud powers, subjects large crypto intermediaries to anti-money-laundering rules and creates clearer federal standards.

In a Tuesday memo, Hougan wrote: “The best thing that can happen if Clarity doesn’t pass this week is that the Polymarket odds break solidly lower.” He added that a drop “into the teens” would allow markets to start pricing crypto assets without the overhang of ongoing legislative risk.

Polymarket prediction markets show the probability of the bill’s enactment in 2026 has fallen to about 14 percent, down from more than 80 percent in February. Hougan said professional investors have held back capital while the bill’s fate remains unresolved and that a sharp decline in passage odds could prompt those investors to redeploy funds under the regulatory framework already taking shape.

Hougan cautioned that a failure would not automatically lift prices and that markets might wobble briefly after a decisive defeat. He warned a missed cloture deadline that leaves the bill in a prolonged negotiation phase — which he described as a “walking dead” state — would extend uncertainty and likely keep institutional capital sidelined.

If Congress delays action, regulatory agencies may act. SEC Chair Paul Atkins has indicated the commission could develop rules addressing issues similar to those in the CLARITY Act. Hougan noted agency rules could be easier for a future administration to reverse. He compared the potential pause in legislation to the 1994 telecommunications effort, when industry activity continued ahead of a broader law passed in 1996.