Crypto’s last shot? This risks sinking the Clarity Act before midterms, warns Galaxy analyst

Time is running out for America’s most important crypto bill.

The Clarity Act has reached a make-or break moment on Capitol Hill — and if it is not signed into law before the midterm elections in November, it may not pass for years, warns Alex Thorn, Galaxy Digital’s head of research.

“If the markup slips past mid-May, the probability of enactment in 2026 will drop sharply,” Thorn warned in a note shared with DL News. “In our view, the odds of Clarity being signed into law in 2026 are roughly 50-50, and possibly lower.”

He’s not alone. Polymarket punters give the Clarity Act a 47% chance of being passed this year, down from 82% in February.

Thorn’s warning comes as the Senate is juggling a debate over Iran military authorisation, unresolved Department of Homeland Security funding and a backlog of presidential nominations for top posts.

The Senate calendar between now and the August recess is packed. The chamber breaks in early August for five weeks, after which midterm campaigning intensifies. If the Democrats retake the House in the November election, then it’s likely that legislative work will grind to a halt.

Bipartisan support

Back in July 2025, the Clarity Act passed the House of Representatives in a 294–134 vote. Seventy-eight Democrats joined Republicans, reflecting rare bipartisan agreement that digital asset markets need a federal framework.

Thorn identified four factors that have driven the initial bipartisan support.

First, there’s Donald Trump. Since retaking the White House, the US president has backed the crypto industry through a series of executive orders, key government appointments, and events.

Second, Tim Scott, the Republican senator from Carolina, has been chairing the Senate Banking Committee, which enjoys jurisdiction over banking matters and has been instrumental in making crypto legislation a key priority.

Third, the Genius Act. Thorn argued that the passing of the landmark stablecoin bill last summer proved that Democrats and Republicans can collaborate on crypto policy.

Fourth, the crypto lobby. The industry ploughed $133 millions into pro-crypto candidates in 2024 — and continue to do so this election cycle — which has helped educate and win over sceptics, Thorn said.

“Those conditions may not persist,” Thorn said.

Pain points

In the Senate, negotiations have been more complicated. Markups were initially expected in January. They were postponed amid disputes over stablecoin rewards.

But while stablecoin rewards dominate headlines, they are not the only hurdle, according to Galaxy.

Another flashpoint is the Blockchain Regulatory Certainty Act provision embedded in the Senate draft. It clarifies that non-custodial software developers — those who write code but do not control user funds — are not money transmitters under federal law.

Crypto advocates view this as essential to keeping open-source development onshore. Law enforcement groups argue it could create investigative blind spots.

Ethics provisions also remain live. Some Democrats are pushing to restrict senior government officials and their families from profiting from crypto holdings while in office.

"No one should be in elective office to profit off their position," Ro Khanna, the Democratic representative of California, said in October.

Such amendments may not derail committee passage, but they could complicate the Senate floor vote, where 60 votes are required.

Concerns about Securities and Exchange Commission authority, and vacant commissioner seats add another political layer. Some Democrats see SEC nominations as leverage in broader negotiations over the bill.

“A floor vote in July is theoretically possible but would require extraordinary political will and coordination given the proximity to the August recess and the midterm campaign season.”

Lance Datskoluo is DL News’ Europe-based markets correspondent. Got a tip? Email him at [email protected]