Author: Qin Xiaofeng, Odaily Planet Daily

The highly anticipated "Digital Asset Market Transparency Act" (CLARITY Act) is expected to continue its delay. Senator Cynthia Lummis previously stated that negotiators expected to finalize the compromise text around July 4th (U.S. Independence Day) and "push forward in July," but progress is clearly lagging.

Now, as the Senate approaches its recess period on August 10th, the window of opportunity is narrowing: the bill must reach the threshold of 60 votes in the Senate (with at least 7 Democrats switching to support), coordinate with the text from the Senate Agriculture Committee, merge with the House bill, and receive the president's signature, all of which must be completed within the next 25 working days, making the timeline extremely tight.

If the window before the August recess is missed, the probability of the CLARITY Act passing this year will further diminish. In fact, prediction market Polymarket shows that the probability of the bill passing this year is only 40%; Galaxy Digital has also lowered the probability of passing in 2026 to 50%.

1. Review of the Latest Developments of the CLARITY Act

The CLARITY Act is landmark cryptocurrency market structure legislation promoted by the U.S. Congress, aimed at clarifying the regulatory boundaries between the SEC and CFTC, providing a non-securities path for decentralized tokens, and requiring digital commodity intermediaries to register and comply with anti-money laundering obligations.

On July 17, 2025, the House passed the HR 3633 bill proposed by French Hill with 294 votes in favor and 134 against, with over 70 votes from Democrats; on May 14, 2026, the Senate Banking Committee advanced it with a vote of 15-9 (with support from 13 Republicans and 2 Democrats). On June 1, 2026, the CLARITY Act was officially included in the Senate legislative calendar (Calendar No. 423), qualifying for full consideration.

However, the advancement of the CLARITY Act throughout June was not smooth. On June 9, negotiations around ethical clauses concerning presidential cryptocurrency holdings broke down, directly leading to some Democratic legislators softening their positions or proposing additional conditions, which slowed the bill’s entry into floor debate. On June 10, the White House held meetings with police and prosecutor groups, after which enforcement struggles regarding Article 604 of the "Blockchain Regulatory Certainty Act" (developer protection clause) became deadlocked; if unresolved, enforcement groups may lobby against it, and Democratic legislators may vote against it for being "insufficiently protective of consumers/fighting crime."

Simply put, the former represents the "political/ethical threshold," while the latter is the "enforcement/safety red line," together forming the last two substantial obstacles for the CLARITY Act to "clear" in the Senate. If these issues cannot be resolved, it will be difficult to gather the 60 votes and finalize the text, thereby failing to complete the legislation before the August 10 recess. These two negotiation issues have directly hindered the final advancement of the CLARITY Act, leading to the failure to meet the July 4 target and the overall progress becoming stuck at critical "roadblocks." Negotiations are still attempting to break the ice, but time is extremely tight.

Stifel's Chief Washington Policy Strategist Brian Gardner stated that to ensure the bill’s passage in 2026, "it may need to pass the Senate by the end of July, ideally by June," warning that if the Senate misses the recess period, the outlook will significantly worsen.

However, the market has little hope for the bill’s passage this year. Galaxy Research’s Alex Thorn lowered the predicted probability of passing the bill in 2026 from 75% to 60% on June 5, citing increasingly tight Senate scheduling. Prediction market Polymarket shows that the probability of the bill passing this year is only 40%.

2. What Happens If the CLARITY Act Fails to Pass on Time?

According to CCN's analysis, if the CLARITY Act does not pass before the August recess, the market's most likely reaction will not be a crash, but a "slow bleed through premium products." In fact, the poor performance of cryptocurrencies throughout June indicates that the market has begun to reprice itself for legislative uncertainty. (Odaily note: the premium products referred to here mainly indicate various spot ETFs)

Data shows that throughout June, there was a cumulative net outflow of approximately $4.5 billion from U.S. Bitcoin spot ETFs, equivalent to about 77,000 BTC being redeemed; this is the largest single-month net outflow since the product's launch in January 2024, surpassing the previous record of about $3.56 billion in February 2025, setting a record for the worst monthly performance.

In fact, XRP may be one of the assets most directly and significantly affected by the bill, as the bill would permanently classify it as a commodity, eliminating the reversible institutional interpretation risk. If delayed or failed long-term, XRP might lose part of its "regulatory favorable premium."

Standard Chartered's Global Head of Digital Asset Research Geoffrey Kendrick predicts a target price of $8 for XRP, on the condition that the Senate fully passes the relevant bill and that there are inflows of $4 billion to $8 billion in ETF funds. JPMorgan predicts that if the bill is passed, XRP ETF inflows will range from $4.3 billion to $8.4 billion in the first year. Data shows that since the launch of the XRP spot ETF in November 2025, cumulative net inflows have been approximately $1.41 billion, 84% of which came from retail, while institutional inflows are still awaiting clear regulatory signals.

For Bitcoin, it has been classified as a commodity since the joint interpretation by the SEC and CFTC in March 2026; the main role of the CLARITY Act is to make this reversible decision permanent under federal law. Even if the bill fails or is delayed for a long time, Bitcoin's narrative as "digital gold" remains relatively robust, with minimal direct impact.

The impact on ETH is similar to Bitcoin; Ethereum has also been classified as a commodity based on this joint interpretation. The failure of the bill may result in DeFi protocols facing a prolonged period of regulatory ambiguity, stifling innovation and capital inflow. Standard Chartered's Geoffrey Kendrick estimates a target price for ETH at the end of 2026 to be $7,500 (later reduced to $4,000), contingent upon the relevant bill passing.

Kristin Smith, head of the Solana Policy Research Institute, stated that many asset allocators are actively exploring digital assets for investment, but they are delaying their funding due to the lack of clear regulatory guidelines. The same reasoning applies to institutional DeFi, with current DeFi projects being on hold pending the rollout of Article 604.

3. What Lies Ahead?

Time for the CLARITY Act to make a breakthrough is limited, and several scenarios may ensue:

• Firstly, it could pass before the August recess: this would be the biggest catalyst, and prices may experience significant rebounds, especially for XRP and related ETFs;
• Secondly, it could be delayed until 2027: this is the least desired outcome by the market, leading to an extended "slow bleed" process, with institutional capital continuing to hold back;
• Thirdly, it could fail and be pushed to the next session: the CLARITY Act is currently in the 119th Congress. If it does not complete Senate floor voting, coordination, and final passage before the August 2026 recess, the entire process cannot be concluded in this Congress; with the start of the new Congress (the 120th, 2027-2028), the bill must be reintroduced and go through all procedures of committee review and floor debate again.

The CLARITY Act is currently at a critical stage of "nearly there but stuck," technically having entered the Senate calendar, but political negotiations, time windows, and bipartisan support remain significant obstacles.

However, as First Digital CEO Vincent Chok stated: "The mere fact that the CLARITY Act has entered the Senate floor voting indicates that the U.S. is closer than ever to resolving regulatory ambiguity... A successful vote will accelerate this process, but failure will not necessarily stop it. In fact, delays in the U.S. framework may create a sense of urgency and extend the window for setting global standards, with the U.S. potentially becoming the de facto global digital asset center."

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