Bernstein: CLARITY bill delays or triggers a new round of cryptocurrency selling

The passage of the CLARITY bill in the U.S. Senate narrows, which may trigger a new round of selling in the crypto market.

According to Bernstein analysts, the decline in the probability of the CLARITY bill being passed in the U.S. Senate may trigger a new round of selling before the market recovers within the year.

Summary

As the Senate's summer recess approaches, the probability of passage of the CLARITY bill has dropped to 28%. Bernstein expects that a failure or postponement of the vote will have an immediate negative impact on the crypto market. The bill still does not appear on the Senate's August 3 schedule, leaving lawmakers with only a few days of action. If a closing debate motion is submitted on August 5, the first procedural vote may be held on August 7.

CLARITY bill not on the Senate agenda on August 3

The Digital Asset Markets Clarity Act (CLARITY Act) was not on the U.S. Senate agenda announced on Monday, August 3, further shortening the time for lawmakers to initiate full-house debate before the summer recess. The official schedule shows that a closing debate vote on the motion to advance H.R. 6500 (a legislative carrier for continuing resolutions) will be held at 5:30 p.m. that day, but no action on H.R. 3633 (the CLARITY Act) is scheduled. The Senate closing debate record also shows that a motion for H.R. 6500 was filed on July 30, but no corresponding petition was found.

The omission does not prevent Senate Majority Leader John Thune from introducing the bill later this week, but means the bill has no publicly confirmed debate timetable ahead of the Senate's local working period tentatively scheduled to begin on August 10. The recess is expected to last until September 11.

Bernstein warns that the crypto market may fall again

Bernstein analysts said that if the Senate fails to advance the bill, it may have an immediate negative reaction to Bitcoin and the entire crypto market. Analysts described this possible reaction as an "urgent" sell-off by the industry that could lead to further declines in digital asset valuations. The warning comes at a time when Bitcoin trading is under pressure, and investors are closely watching whether Congress can complete its crypto policy agenda before the midterm elections.

"From a tactical perspective, we expect the crypto market to bottom out and show momentum between the end of the third quarter and the beginning of the fourth quarter of 2026 (before the midterm elections)," Bernstein analysts wrote in a report on Monday.

Predicts that market traders 'confidence is also declining. The probability of the CLARITY bill passing by the end of 2026 on Polymarket has dropped to 28%, down 10 percentage points from the past week and 12 percentage points from the past month. Traders placed approximately $3.77 million in bets on the market.

Galaxy Digital has previously lowered its estimate of the probability that the bill will become law this year to 50%, citing the limited remaining schedule of the Senate.

Regulators may accelerate progress if Congress fails to act

Bernstein pointed out that legislative delays could force the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to provide more regulatory guidance through the Crypto Project. The joint plan aims to leverage existing agency authority, while Congress is working to develop a permanent framework for market structures. Bernstein expects regulators to issue explanations covering token classification and decentralized finance, while accelerating proposed exemptions for some token issues.

Such exemptions may temporarily exempt eligible token offerings from securities laws under certain conditions. However, institutional guidance does not provide the same legal certainty as Congressional legislation. The CLARITY bill will establish rules for digital asset issuers and trading platforms, while dividing the regulatory responsibilities of the SEC and the CFTC. Senator Cynthia Loomis released updated legislative text on July 22 that integrates the work of the Senate Banking and Agriculture Committees.

Banking groups have opposed parts of the bill, arguing that its stablecoin provisions could allow crypto platforms to provide rewards without meeting equivalent bank requirements.

August 5 may be the last actual submission window

Under Senate Standard Rule 22, a closing debate petition requires 16 senators to sign it. If the petition is filed on Wednesday, August 5, a closing debate vote can be held on Friday, August 7-provided that the Senate is still in session. The vote only determines whether the Senate limits debate on the advancement motion and does not mean passing the CLARITY bill. Opening closing debate on legislation typically requires 60 votes and allows up to 30 hours of additional deliberation time. Senators still need to vote on advancing motions, amendment debates and final passage votes, and may need to conduct a second closing debate process.

Meanwhile, White House officials are considering a bipartisan ethics proposal negotiated by Republican Sen. Tom Tillis and Democratic Sen. Ruben Gallego. The proposal would reportedly allow state attorneys general to challenge the Justice Department if it fails to enforce federal ethics rules.

Since no full-house action has yet been scheduled, the remaining days before the Senate recess will determine whether the CLARITY bill moves forward now or returns to the increasingly crowded agenda in September.