CLARITY Act Update: Final Push Ahead

This report was originally sent directly to clients of Galaxy Trading and Galaxy Asset Management on April 20, 2026. Trade or invest with Galaxy to receive the most timely research directly in your inbox.

Overview

With time starting to run out on the 119th Congress's calendar, comprehensive crypto market structure legislation is nearing the endgame stage.

The CLARITY Act passed the House in July 2025 with strong bipartisan support (294-134) and has been the subject of intensive Senate negotiations since January. The Senate Banking, Housing, and Urban Affairs Committee (SBC) is expected to announce a markup hearing this week, likely for the last week of April. Three key issues remain unresolved, according to Chairman Tim Scott (R-S.C.): stablecoin yield language, DeFi provisions, and securing all Republican votes on the committee. Several additional issues, including the Blockchain Regulatory Certainty Act's treatment of noncustodial software developers, ethics provisions related to government officials' crypto holdings, and SEC-related concerns, also remain live and could complicate the path forward.

From the Banking Committee markup, the bill must still clear a 60-vote Senate floor vote, be reconciled with the Agriculture Committee's version, be reconciled with the House-passed bill, and be signed by the President. Each step requires time on a rapidly diminishing legislative calendar: CLARITY must compete for scarce Senate floor time against the Iran military authorization debate, the unresolved DHS funding standoff, and a backlog of nominations. On Monday, Punchbowl reported that Sen. Thom Tillis (R-N.C.), a key negotiator on the Senate Banking Committee, called for delaying SBC markup until May. If the markup slips past mid-May, the probability of enactment in 2026 will drop sharply. Senator Cynthia Lummis (R-WY) has warned that failure this year could delay market structure legislation until 2030 or beyond.

In our view, the odds of CLARITY being signed into law in 2026 are roughly 50-50, and possibly lower, though others at Galaxy are more optimistic. The uncertainty stems not from any single issue but from the number of unresolved questions that must be settled, in sequence, under severe time pressure.

We spent last week in Washington meeting with key Senate and House members, administration and agency officials, and industry stakeholders to advocate for the bill's passage. This note contains our observations on those discussions, the key outstanding issues, and potential timing.

Background

The Digital Asset Market Clarity Act of 2025, or CLARITY Act, passed the House of Representatives on July 17, 2025, by a vote of 294-134. All 216 Republicans who voted supported the bill, with none opposed and four not voting. On the Democratic side, 78 members crossed the aisle to vote in favor, while 134 voted against. The bill was introduced by House Financial Services Committee Chairman French Hill (R-AR) on May 29, 2025, and advanced through the Financial Services Committee (47-6) and the Agriculture Committee (32-19) in joint markup sessions on June 10. The strong House vote reflected broad consensus that a federal regulatory framework for digital assets is overdue: the bill establishes clear jurisdictional boundaries between the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC); creates a threshold test (“mature blockchain test”) for when certain coins are or are not securities; defines a pathway for tokens to be treated as non-securities once their networks are sufficiently decentralized; and brings digital commodity intermediaries under federal registration and anti-money-laundering obligations for the first time. The Senate Banking Committee released its own draft in July, and the bill was received by the Senate on Sep. 18, and referred to the banking panel.

In the Senate, the CLARITY Act has been the subject of parallel workstreams. The Agriculture Committee released its own discussion draft in November and advanced the Digital Commodity Intermediaries Act, which focuses primarily on CFTC authority over digital commodity markets (including spot markets), out of committee on Jan. 29. Separately, on Jan. 12 the Senate Banking Committee, chaired by Tim Scott (R-S.C.) with Elizabeth Warren (D-MA) as ranking member, released a 278-page Amendment in the Nature of a Substitute (ANS) representing the base negotiating text for the committee’s work. That text goes substantially beyond the House-passed bill, incorporating nine titles covering securities innovation, illicit finance, decentralized finance, banking activities, software developer protections (the Blockchain Regulatory Certainty Act, or BRCA), customer property protections in bankruptcy, and other matters. A markup hearing was initially expected in mid-January but postponed after disagreements over stablecoin yield restrictions. A second markup attempt was also cancelled. Before CLARITY can proceed to a full Senate floor vote, the Banking Committee and Agriculture Committee versions must be reconciled, and the merged bill must then be reconciled with the House version, all before reaching the President's desk.

Since January, the primary obstacle to advancement has been a dispute over stablecoin rewards between the banking industry and crypto firms. (The GENIUS Act, signed into law last year, forbids stablecoin issuers to share interest with holders directly but allows arrangements in which exchanges pay rewards for holding stablecoins on their platforms; the banks want to ban such incentives). On March 20, Senators Thom Tillis (R-N.C.) and Angela Alsobrooks (D-MD) announced an agreement in principle, brokered with White House involvement, that would ban yield paid solely for holding a stablecoin while permitting narrowly defined, activity-based rewards tied to payments, transfers, or platform usage. Patrick Witt, Executive Director of the President's Council of Advisors for Digital Assets and the primary West Wing point person on crypto legislation since David Sacks's departure in March, has described the compromise as durable and confirmed that several other previously intractable issues have been resolved behind the scenes. Crypto industry representatives reviewed the text on March 23 and found the language restrictive; Coinbase initially objected but reversed course on April 10 after Treasury Secretary Scott Bessent publicly called for a markup and the exchange's CEO, Brian Armstrong, endorsed the bill. On April 8, the White House Council of Economic Advisers published a 21-page analysis finding that a full stablecoin yield ban would increase bank lending by only $2.1 billion, or 0.02% of outstanding loans, at a consumer cost of $800 million, undermining the banking industry's core argument that unrestricted stablecoin yield poses a structural threat to deposits. As of this writing, Chairman Scott has not yet announced a markup date. He told Fox Business on April 14 that three issues remain: stablecoin yield language, DeFi provisions, and securing all Republican votes on the committee. Senator Tillis, who controls the release of the revised yield text, said last week that publication was unlikely this week, and on Monday, he called to delay markup into May. Until that text is released and the 48-hour notice period under committee rules has elapsed, no markup can be scheduled.

Importance of Passing CLARITY Before Midterms

The CLARITY Act provides a significant and durable legislative foundation for the digital asset industry: classification of different types of digital assets and their regulatory treatment; delineation of jurisdictional responsibilities across market regulators; protections for non-custodial developers; new illicit finance interdiction powers for the Treasury Department; and much more. The bill provides the legal and regulatory certainty needed to continue the convergence of crypto and traditional capital markets that is already underway, creating the conditions for U.S. capital markets to modernize while providing clear and substantial guardrails, disclosures, and investor protections for the first time. It settles material outstanding questions that have kept institutional capital and infrastructure on the sidelines or pushed it offshore. Overall, we view the CLARITY Act as a strong bill both on technical terms and as a policy matter.

Given the balance of power in the House and Senate (very slim Republican majorities), we believe it is crucial that CLARITY is passed and signed into law before the midterm elections in November. While there is substantial Democratic support for the bill (as evidenced by 78 Democrats voting for CLARITY in the House in 2025), the possibility of a shift in balance of power in the 120th Congress, which would convene in January 2027, substantially reduces the likelihood of such a strong piece of legislation advancing after November 2026.

A Democratic majority in either chamber would mean new committee chairs, new floor priorities, and potentially a very different posture toward crypto legislation. To put a fine point on it: the CLARITY Act in its current form would be very unlikely to emerge from a Senate Banking Committee chaired by either Elizabeth Warren, the current ranking member, or Sherrod Brown. Brown was Chair of Senate Banking in the 118th Congress but was unseated in 2024 by Bernie Moreno. Brown is now running against Jon Husted (R) in an Ohio special election set to take place in November. (Husted was appointed by Gov. Mike DeWine after JD Vance resigned to become Vice President; the winner of the race will serve only through 2028, underscoring how fluid the Senate composition is about to become.) It is possible that Brown’s prior tenure would give him priority for the chairmanship of Senate Banking over Sen. Warren, though unclear. Both senators have historically been hostile to the digital assets industry’s priorities.

The bipartisan coalition that exists today was built under specific conditions: a pro-crypto White House, a Republican Banking Committee chair, the successful passage of the GENIUS Act as a demonstration of bipartisan viability, and an industry that advocated and spent heavily to elect crypto-friendly members in 2024 and turn previously skeptical lawmakers into supporters. Those conditions may not persist.

Senator Lummis has warned publicly that failure to pass CLARITY this year could delay comprehensive market structure legislation until 2030 or beyond, because a new Congress would need to restart the legislative process from scratch with new committee compositions and potentially very different political incentives. Even if Republicans hold their majorities, the political appetite for complex, multi-stakeholder financial regulation could evaporate during a lame-duck session or the opening months of a new Congress, when leadership attention shifts to organizing committees, confirming nominees, and setting a fresh legislative agenda. The current window is extremely opportune and may not reappear any time soon.

That said, even without CLARITY, a favorable regulatory environment is likely to persist through the end of Trump's presidency. Regulatory agencies have demonstrated an ability to advance market structure through administrative relief, interpretive guidance, and formal rulemaking. Those advancements have spurred major banks, brokerages, and exchanges to take meaningful steps in building blockchain infrastructure and offering digital asset services. The level of integration that traditional capital markets participants achieve in the next 2.5 years may be sufficient to prevent significant rollback even in the case of a hostile future administration.

The distinction, however, is one of timeframe and durability. The regulatory progress to date, including the SEC-CFTC joint interpretive release, SEC no-action letters, and OCC guidance on bank crypto activities, is entirely sub-statutory and therefore reversible by a future administration without congressional action.

The industry will not be in crisis without CLARITY in 2026, but it may remain on borrowed time. In the long term, a comprehensive market structure bill is essential to codify the digital asset industry for decades to come.

Issues in Ongoing Senate Negotiations

While the "stablecoin rewards" issue has dominated headlines and conventional wisdom has been that it is the (possibly only) major hurdle blocking the bill's advancement, several other key issues are percolating beneath the surface. Here are the big sticking points:

• Stablecoin rewards. We are waiting on Sen. Tillis to publicly release the compromise text he has been negotiating with Sen. Alsobrooks (D-MD), which we understand continues to ban rewards "solely for holding" a stablecoin while permitting narrowly defined activity-based rewards tied to payments, transfers, or platform usage. If so, that is essentially similar to the deal Coinbase explicitly rejected in January. We need to see the language, however, and senators have kept it extremely secret. The White House CEA report published April 8 found that a full yield ban would increase bank lending by just $2.1 billion (0.02% of outstanding loans) at a consumer cost of roughly $800 million, significantly weakening the banking industry's deposit-flight argument. The American Bankers Association pushed back almost immediately, arguing the CEA analyzed the wrong question by studying the effect within today's roughly $300 billion stablecoin market rather than modeling a future in which yield-paying stablecoins grow to compete meaningfully with the banks’ $18 trillion deposit base. There is a meaningful gap between the two sides' framing, and whoever defines the scope of the analysis likely defines the outcome. Coinbase CEO Armstrong reversed his opposition to the bill on April 10, appearing to remove what had been the single largest industry obstacle. The underlying text may not have shifted materially from what Coinbase rejected in January, but the political calculus did: Bessent's public pressure, the CEA report, and Coinbase's pending national bank charter application (which gives the company a federal regulatory path regardless of the bill's outcome) all likely influenced Armstrong's reversal. The underlying commercial tension between exchanges and banks over stablecoin yield has not disappeared.

• The Blockchain Regulatory Certainty Act (BRCA), included as Section 604 of the SBC's ANS, clarifies that software developers and infrastructure providers who do not custody or control user funds are not money transmitters under the Bank Secrecy Act. The crypto industry considers this provision a red line and views it as essential to keeping open-source development onshore. The provision is opposed by law enforcement groups and has drawn bipartisan pushback from the Senate Judiciary Committee. In January, Judiciary Chair Chuck Grassley (R-IA) and Ranking Member Dick Durbin (D-IL) sent a joint letter to Chairman Scott and Ranking Member Warren objecting to the BRCA's inclusion, arguing that the Banking Committee had taken steps to modify Title 18 of the U.S. Code (specifically 18 U.S.C. §1960, which prohibits unlicensed money transmission) without consulting the committee that has jurisdiction over federal criminal law. They warned that the provision would create a "blind spot" for state and local law enforcement agencies that rely on Financial Crimes Enforcement Network (FinCEN) registration information to trace money flows in investigations of potential money laundering, terrorism financing, and drug and human trafficking. Separately, Sen. Catherine Cortez Masto (D-NV), a Banking Committee member and former Nevada Attorney General, has been pushing for changes to address law enforcement concerns. The National Sheriffs' Association and the National District Attorneys Association have also weighed in, warning that the bill's DeFi language risks limiting prosecutors' ability to pursue financial crime cases. The crypto industry's counterargument is that the BRCA does not alter anti-money-laundering statutes under 18 U.S.C. §§ 1956 and 1957; does not limit prosecutions for fraud or sanctions evasion; and simply aligns the criminal code with FinCEN guidance and the DOJ's own recently articulated position (per an August 2025 speech by then-Acting Assistant Attorney General Matthew Galeotti) that truly decentralized, noncustodial software does not constitute money transmission. Whether Grassley and Cortez Masto can be satisfied without gutting the provision is one of the more delicate negotiations in the bill.

• Ethics. Democrats have consistently sought to include provisions barring senior government officials, elected officials, and their family members from holding financial interests in or profiting from crypto assets while in office. This issue is aimed squarely at the Trump family's involvement with various crypto projects and has been a Democratic priority throughout the negotiation process. It did not make it into the SBC's January ANS, but multiple Democratic senators have signaled that they will push for ethics amendments during a committee markup or on the Senate floor. This is unlikely to be a dealbreaker in committee, but it could become a flashpoint during floor debate, where any senator can offer amendments and where Democratic votes are needed to reach 60.

• SEC relief authority. Section 505 of the Senate Banking Committee's ANS addresses the tokenization of securities and other real-world assets. It is seen by some market participants and former regulators as overly constraining the SEC's ability to use its exemptive and no-action relief tools to accommodate innovation in digital asset markets. Put plainly, many fear this section would make the SEC's "innovation exemption" process impossible or even unlawful by imposing rigid statutory requirements that limit the Commission's longstanding discretion under statutes like Section 28 of the Securities Act and Section 36 of the Exchange Act. The concern has been raised by attorneys and compliance professionals working on tokenization projects and by some Democrats who view the provision as an overcorrection against the current SEC's progressive stance toward crypto. (Under Chair Atkins, the agency has been actively using no-action relief and staff guidance to facilitate digital asset activity, and Section 505 could curtail the flexibility the Commission is exercising.)

• SEC quorum. The SEC currently has three commissioners out of five seats, all Republican appointees: Chair Paul Atkins and Commissioners Hester Peirce and Mark Uyeda. By longstanding tradition, no more than three of the five commissioners may be from the same political party, and the two vacant seats are expected to be filled by Democrats. Senate Minority Leader Chuck Schumer and President Trump have not been able to align on a list of candidates. Democrats may view the vacancies as negotiating leverage and a form of protection for their interests if CLARITY passes: confirming two Democratic commissioners would restore the Commission's bipartisan character and give Democrats a voice in the rulemakings that would follow CLARITY's enactment. Some Senate Democrats have suggested, at least informally, that progress on SEC nominations could smooth the path for CLARITY on the floor. This is less of a bill-text issue and more of a political sequencing question, but it matters for vote-counting purposes because CLARITY needs 60 votes and therefore meaningful Democratic support.

Not all of these issues are seen as dealbreakers or linchpins for an eventual final deal, but in aggregate they represent meaningful risk to the timeline. Any one of them could consume days or weeks of negotiating time that the calendar cannot spare.

Timelines and Likelihoods

The Senate Banking Committee was widely expected to announce this week that it is scheduling a markup hearing for the last week of April (next week). However, key committee member Sen. Thom Tillis (R-NC), who has been leading negotiations on the stablecoin rewards issue, said Monday that the committee should wait until May before scheduling a markup.

The procedural path from here to the President's desk involves five sequential steps: (1) the Senate Banking Committee marks up and votes to advance the bill; (2) the full Senate passes the bill with 60 votes; (3) the Banking Committee's bill is reconciled with the Agriculture Committee's version (the Digital Commodity Intermediaries Act, which cleared committee on January 29); (4) the merged Senate bill is reconciled with the House-passed CLARITY Act from July 2025; and (5) the President signs the final legislation. Each of these steps requires time on a dwindling legislative calendar. The bill text will be publicly available shortly before any markup session. Once a markup is scheduled, the committee must debate and vote on amendments before advancing the bill. A floor vote requires not just 60 votes to invoke cloture but also time for debate and amendment votes, which can take a week or more.

The Senate's working calendar between now and the August recess is limited and contested. The chamber is in session through the end of April, then breaks until May 11, works May 11-22, works three weeks each in June and July with a two-week recess around July 4 (the country's 250th anniversary), and works the first week of August before departing for a five-week recess beginning Aug. 10 (the August Recess). Within that window, CLARITY must compete for floor time with several major items: the ongoing Iran military authorization debate, which has already consumed significant floor time and could escalate unpredictably; the unresolved DHS funding standoff (the only FY2026 appropriations bill not yet enacted); and a steady stream of judicial and executive nominations. Sen. Bernie Moreno has stated publicly that the bill must reach the full Senate floor by May to avoid being consumed by the midterm campaign calendar. Sen. Bill Hagerty (R-TN) has expressed confidence that the bill can clear the Banking Committee in April and reach the full Senate before month's end, though Chairman Scott's April 14 comments suggest that timeline has slipped. Scott is in the driver’s seat and it’s already the second-to-last week of April at the time of writing. Every week of delay compresses the window for the sequential steps required to reach the President’s desk. That said, a May markup is not fatal to the bill’s prospects if it happens early in the month, particularly if the committee vote produces a comfortable bipartisan margin that signals viability on the floor.

The most likely scenario, in our view, is a Banking Committee markup in early or mid-May, followed by a floor vote attempt sometime in May or June. If the markup slips past mid-May, the probability of enactment in 2026 drops sharply: the remaining legislative calendar simply does not easily accommodate the full five-step process described above, particularly given the competing demands on floor time. 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.

In our view, the odds of CLARITY being signed into law in 2026 are roughly 50-50, and possibly lower. Others at Galaxy are more optimistic and place the likelihood above 50%. Polymarket currently prices passage at 50%, and TD Cowen analyst Jaret Seiberg has suggested that the only likely path to enactment may be Congress passing a bill that neither the crypto industry nor the banking lobby is entirely happy with, noting that “such an outcome is possible as Congress occasionally passes legislation simply to get it done” but that “this is the exception and not the rule.” Seiberg's overall posture is pessimistic on passage, which is worth noting: his view is that this outcome, while possible, is not the base case. We think that framing is roughly right.

The uncertainty stems not from any single issue but from the sheer number of unresolved questions that must be settled in sequence under severe time pressure. Stablecoin rewards may well be resolved in the coming weeks. But the BRCA, ethics provisions, SEC relief authority, SEC quorum politics, DeFi provisions, and the basic challenge of assembling 60 Senate votes on a novel and complex piece of financial regulation all remain live variables. Any one of these could delay the process by days or weeks that the calendar cannot spare.

We are both hopeful and actively assisting where possible. The key near-term milestones to watch are: (1) the release of Tillis's revised stablecoin yield text, which will signal a Senate Banking Committee markup is imminent; (2) Chairman Scott's announcement of a markup date; (3) the committee vote itself and the margin of support; and (4) whether Majority Leader John Thune schedules floor time before the July 4 recess.

If CLARITY clears the Banking Committee with a comfortable bipartisan margin, that will be a strong signal that the remaining steps can be completed. If it advances on a party-line or near-party-line vote, the path to 60 on the floor becomes significantly harder, and the bill's prospects for 2026 will dim considerably.