The CLARITY Act is running out of time. Senate schedules filled up fast heading into summer recess, and crypto analysts at Bernstein are now warning that if lawmakers miss their window, markets could face an ugly selloff. Bitcoin and other assets would likely get hit hard in a "knee-jerk" reaction, though recovery would probably come by late Q3 or early Q4.

The Digital Asset Market Clarity Act vanished from the Senate's Monday, Aug. 3 schedule. That's a problem. With senators breaking for recess on Aug. 10 and not returning until Sept. 11, lawmakers have almost no room left to start floor proceedings before they disappear. The schedule instead showed a 5:30 p.m. cloture vote on H.R. 6500, a vehicle for a continuing resolution. No sign of H.R. 3633. Senate Majority Leader John Thune could still force it through later this week, but time is slipping away.

What's really at stake

Crypto traders are already betting against passage. Over at Polymarket, where bettors put real money down, the probability of CLARITY Act adoption before Dec. 31, 2026, sits at just 27%. That's down 10 percentage points in a single week and 12 points month-to-date. Some $3.77 million has been wagered on the outcome, and the momentum points firmly toward failure.

If the Senate kicks this down the road, Bernstein expects both the SEC and CFTC to step in with their own regulatory guidance through something called Project Crypto. The agencies might accelerate exemptive relief for certain token offerings and clarify how tokens and DeFi products get classified. But here's the catch: agency guidance isn't the same as law. It lacks the permanence and certainty that actual legislation would provide. The CLARITY Act would have established clear responsibility splits between the SEC and CFTC for digital asset regulation.

Financial institutions aren't entirely happy with the bill either. Some clauses around stablecoins have drawn pushback from the banking sector, which sees potential conflicts with their own interests.

This article is for informational purposes only and should not be construed as financial advice. Cryptocurrency markets are volatile and regulatory decisions carry significant risk. Always conduct your own research before making investment decisions.