CLARITY Act delayed, delayed through expectations until 2027

Predicted that the market's expected timeline for the CLARITY Act has been adjusted to 2027

Predicted that the market's expected timeline for the CLARITY Act has been adjusted to 2027 after U.S. Senate leaders decided not to initiate the procedural steps required to vote before the August recess.

Core Summary

·The odds on Kalshi's platform that the bill will take effect before July 2027 dropped by 8 percentage points to 41%.
·Senate Majority Leader John Thune did not file a motion to close the debate on Tuesday.
·Relevant contracts currently show a 65% chance that the bill will become law before January 2028.
·Matt Hogan, chief investment officer at Bitwise, said that even if Congress does not take immediate action, cryptocurrencies "will be safe and sound."

Expected timeline for CLARITY Act shifts to 2027

As the time window before the Senate recess narrows, Kalshi traders are increasingly less confident that Congress can complete the CLARITY Act in 2026. Contract prices, which track whether the bill will take effect before July 1, 2027, fell 8 percentage points to 41%, on Tuesday. The decline suggests that traders are increasingly inclined to believe that the process will continue beyond 2026, although the contract itself does not just measure passage in 2026. The probability that the bill will take effect before October 1, 2027 is 58%. The likelihood of it becoming law before January 1, 2028 rose to 65%, indicating that bettors still expect the bill to progress over a longer period of time. More than US$5.42 million in contracts have been traded on the Kalshi market. The expected shift came after another day when Senate Majority Leader John Thune failed to submit a motion to close debate, making it impossible for the Senate to initiate a formal procedural vote countdown.

Senate delays compress voting window

The Senate's August 4 agenda did not include H.R. Bill 3633 also includes only two unrelated proposals on the official list of pending closing debate motions. As of the end of Tuesday's meeting, no motions involving the CLARITY Act had been announced. Matt Hogan, chief investment officer at Bitwise, pointed out that Wednesday, August 5, is the actual deadline for Senate leaders to submit end-of-debate motions to preserve the possibility of a vote on Friday. Under Senate Article 22, a motion to close debate requires the co-sponsorship of 16 senators. Voting usually takes place on the next calendar day after the motion is filed, and one hour after the Senate meets. If the motion to close debate is successful, the bill could still face up to 30 hours of debate. The timetable leaves lawmakers little room to resolve major differences before the August recess. Journalist Eleanor Trett attributed Thun's decision in part to procedural complications posed by the continuing resolution, uncertain support votes and outstanding terms. Republicans have 53 seats in the Senate, which means that if all Republicans support it, the bill will still need at least 7 Democratic votes to reach the 60-vote closing debate threshold.

Gaming controversy becomes another obstacle

Lawmakers are also considering amending the bill to protect state and tribal jurisdiction over sports betting and casino-related markets. At a roundtable meeting of the Senate Indian Affairs Committee on Tuesday, Tehashi Hill, vice president of the Indian Gaming Association, argued that the sports and casino prediction markets should continue to be governed by state and tribal gaming laws. This position conflicts with an interpretation that places such contracts entirely under the jurisdiction of the Commodity Futures Trading Commission (CFTC). Supporters of the amendment see the CLARITY Act as a potential vehicle for defining the CFTC's power over forecasting markets. However, including the controversy in a broader package of bills on the structure of the cryptocurrency market could complicate already difficult cross-party negotiations. As lawmakers neared recess, separate discussions on the ethics provisions and the Blockchain Regulation Definiteness Act had yet to make progress.

Cryptocurrency adoption may continue without Congressional legislation

Hogan said the digital asset industry could continue to grow even if the Senate failed to act before lawmakers left Washington. "Cryptocurrencies will be safe and sound," he wrote in an investor memo dated August 4. He believes that while banks and other traditional financial companies expand their digital asset businesses, the SEC's rulemaking could provide another path for regulatory clarity. However, his remarks represent industry views rather than confirmed regulatory results. Missing the current Senate window will not kill the CLARITY Act, but it will delay efforts to establish a statutory division of powers for the SEC and CFTC and make U.S. cryptocurrency companies more dependent on regulators 'rules and existing enforcement interpretations. Kalshi's latest pricing reflects this difference. Traders have not abandoned the possibility of market structure legislation, but they increasingly expect any final agreement to be reached by 2027 rather than the end of 2026.