Analysis: The <i>CLARITY</i> Act's Failure Could Trigger Another Cryptocurrency Market Sell-off

BlockBeats News, August 3rd, Investment firm Bernstein stated that the prospect of the US Digital Asset Market Clarity Act passing is diminishing. If the Senate fails to advance the bill before recess, it may trigger a short-term negative market reaction, further putting pressure on Bitcoin and the overall crypto asset valuation.

Bernstein pointed out that the failure of the bill could lead to a market "instinctive sell-off," but in the medium to long term, it could also prompt the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to accelerate regulatory actions, including clarifying token classification rules, establishing a Decentralized Finance (DeFi) regulatory framework, and advancing token issuance exemptions.

Bernstein expects the crypto market to potentially bottom out from the end of the third quarter to the beginning of the fourth quarter and gradually regain momentum before the US midterm elections.

Currently, the market's expectations for the CLARITY Act to be signed into law by the end of 2026 continue to decline. Data from the prediction platform Polymarket shows that the probability of the bill passing this year has dropped to 31%, down 7 percentage points from a week ago and 9 percentage points in the past month, with approximately $3.7 million in related bets.

The CLARITY Act aims to establish the first US digital asset market regulatory framework, but it has faced opposition from the banking industry over stablecoin yield provisions. Previously, Galaxy Digital had lowered the probability of the bill becoming law in 2026 to 50% and warned that the Senate's advancement time is running short.