Bernstein analysis suggests crypto markets have underpriced potential passage of the Clarity Act despite improved ethics and banking provisions.
Regulation & Gov ·
Bernstein analysts contend that crypto markets have failed to account for a potential positive outcome on the Clarity Act, despite recent Republican revisions aimed at addressing Democratic objections. The bill's sponsors released a revised draft incorporating 126 changes requested by Democrats, including enhanced ethics enforcement mechanisms involving state attorneys general and requirements for asset divestment or blind trusts. These modifications to ethics rules—previously limited to Justice Department enforcement—could shift Democratic calculations on the legislation's advancement.
The framework would establish federal jurisdiction over digital assets while clarifying which regulator, the SEC or CFTC, holds authority over specific market functions. A Senate procedural vote is scheduled for Tuesday. The latest revision also addresses banking sector concerns by allowing the Treasury to restrict stablecoin rewards if they threaten community bank deposit bases, an amendment some Democratic negotiators sought.
Disagreement persists on enactment likelihood. One analyst estimated a 25% probability of passage this year, while another raised their forecast to 30–40% from below 10%. Democratic backing remains uncertain despite Republican claims that concessions address core demands. If Congress does not act, the CFTC has signaled intent to pursue regulatory authority through existing powers, though legislative action would provide longer-term durability against future policy reversals.