TLDR
- Senate Banking Committee approval required by April deadline or 2026 passage probability plummets
- Polymarket odds sit at 56% after 9-point decline; Kalshi projects 30% probability before June
- Stablecoin yield permissions remain central dispute blocking progress
- Coinbase withdrew support in January, stating preference for no legislation over harmful regulation
- Gnosis co-founder expresses concern about centralization risks from current bill language
The CLARITY Act, America’s proposed crypto market structure legislation, faces a critical time constraint. Galaxy Research head Alex Thorn identified early May as the final viable deadline for Senate floor consideration if the bill hopes to become law in 2026. The Senate Banking Committee must complete its approval process before April ends to meet this timeline.
Senate Majority Leader John Thune has indicated April passage appears unlikely. Current Senate priorities center on the SAVE America Act, which has relegated the CLARITY Act to a lower position on the legislative calendar.
Thorn emphasized that each passing day reduces available time for floor discussion. He characterized 2026 passage odds as “extremely low” if the committee fails to act before April concludes.
Prediction markets demonstrate this growing uncertainty. Polymarket data shows passage probability has fallen 9 percentage points to 56% for this year. Kalshi forecasts remain more conservative, projecting 30% likelihood before June and merely 7% before May.
Stablecoin Yield Remains Central Obstacle
The primary legislative battleground concerns stablecoin yield distribution. This debate focuses on whether issuers should receive authorization to distribute interest earnings to users.
Representative French Hill stated that prohibiting stablecoin yield represents a requirement for Senate advancement. Traditional banking institutions maintain that yield-generating stablecoins threaten to divert deposits from regulated financial entities.
Cryptocurrency firms counter that reward mechanisms enhance stablecoin utility for payment applications. Coinbase withdrew its endorsement in January. CEO Brian Armstrong stated the draft legislation would undermine decentralized finance, prohibit stablecoin yield, and restrict tokenized real-world assets. Armstrong declared the company prefers no legislation to detrimental legislation.
Senator Angela Alsobrooks suggested compromise may require concessions from all parties. White House crypto adviser and Coinbase CLO Paul Grewal criticized banks for creating procedural delays.
DeFi and Regulatory Authority Questions Remain Open
Thorn suggested the stablecoin discussion may represent only one of several remaining hurdles. He highlighted outstanding questions regarding decentralized finance supervision, developer liability protections, and the division of regulatory responsibilities between the SEC and CFTC.
Lawyer Jake Chervinsky noted that banking institutions also harbor concerns about stablecoin capital flowing into DeFi platforms beyond the yield question alone.
Gnosis co-founder Dr. Friederike Ernst expressed concern that the bill’s present framework creates risk of channeling all crypto activity through licensed intermediaries. She cautioned this approach could consolidate crypto infrastructure control among a limited number of major institutions.
Ernst acknowledged positive elements in the legislation, including protections for peer-to-peer transactions and self-custody rights, plus clarification of SEC and CFTC jurisdictional boundaries.
Senator Bernie Moreno expressed continued optimism about April passage and delivery to President Trump for signature. Thorn observed this schedule appears increasingly challenging to achieve.
