Galaxy Digital has sharply reduced its estimated probability that the CLARITY Act will become law in 2026, cutting the figure to 10%. The downgrade, announced by the firm’s head of firmwide research Alex Thorn, comes as the Senate prepares to return from its August recess with a compressed legislative schedule and several key policy disagreements still unresolved.

The Digital Asset Market Clarity Act aims to establish a federal framework for digital asset markets by dividing regulatory oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission. It also addresses stablecoin incentives, anti-money laundering requirements, decentralized finance, and ethics rules for government officials involved in crypto activities.

Odds Decline Tracks Narrowing Legislative Window

Galaxy had previously raised its passage estimate to 75% following the Senate Banking Committee’s bipartisan advancement of the bill in May. The firm later lowered the figure in stages—to 60%, then 50%, and 30% by late July—as competing priorities and unresolved negotiations reduced available floor time. The latest cut to 10% on August 14 reflects the absence of settled agreements on core issues before lawmakers left Washington.

Senators are scheduled to return on September 14. Majority Leader John Thune filed a cloture motion before the recess, setting up a potential procedural vote on September 15. That vote would require 60 senators to limit debate. Republicans hold 53 seats, meaning at least seven additional votes would be needed if party members remain unified.

The Senate calendar shows roughly 14 scheduled session days before an October recess tied to midterm elections. Thorn noted that the bill would need immediate procedural action and sustained floor attention to advance under those constraints.

Committee Progress Meets Persistent Policy Disputes

The Senate Banking Committee advanced the legislation on a 15-9 vote on May 14. All Republicans and two Democrats, Ruben Gallego and Angela Alsobrooks, supported moving the measure forward. Committee text outlined rules covering digital commodities, securities treatment, illicit finance controls, and decentralized finance activity.

Despite that progress, several sticking points remain. Democrats have sought stronger ethics enforcement and tougher anti-money laundering provisions. Negotiations have focused on restrictions on federal officials operating crypto-related businesses. Some Republicans have pressed for greater protections for community bank deposits.

Stablecoin rewards have emerged as another major point of contention. Banking groups, including the American Bankers Association, have argued that yield-like incentives on stablecoins could pull deposits away from traditional lenders and reduce lending capacity. Crypto industry representatives have countered that broad restrictions would be anti-competitive. Community bank advocates have continued lobbying senators on deposit flight risks.

The committee draft also proposed applying Bank Secrecy Act requirements to digital asset intermediaries and preserved certain Securities and Exchange Commission exemptive authorities.

Prediction Markets and Parallel Regulatory Moves

Prediction market traders have similarly lowered expectations for the bill. Odds on Polymarket for passage of the CLARITY Act in 2026 have declined substantially from earlier highs near 80%, with recent readings falling toward or below the 20% range. Separate contracts tracking related outcomes for assets such as XRP have shown comparable skepticism.

In parallel developments, the Securities and Exchange Commission canceled a scheduled August 14 open meeting that was expected to consider a tailored offering regime for certain crypto-related investment contracts. The cancellation left both the legislative and agency rulemaking tracks without near-term resolution.

The Commodity Futures Trading Commission has separately asserted existing authority over prediction markets, ordering one exchange to continue operating under Commodity Exchange Act principles amid state-level legal challenges.

Industry Pressure and the September Test

Industry groups maintained pressure before the recess. Stand With Crypto reported that more than 200 organizations urged Senate leaders to schedule floor consideration, citing the shrinking election-year calendar.

The September 15 cloture vote now stands as the next clear procedural checkpoint. Failure to secure 60 votes could effectively end prospects for the bill this year. Even a successful cloture vote would still leave amendment debates and further floor procedures before final passage, along with the need to resolve the remaining policy differences.

Galaxy’s revised assessment leaves the legislation technically alive but with a sharply narrowed path forward as the Senate’s limited working period approaches.