CLARITY Act Passage Odds Plummet Amid Disputes Over Ethics Provisions

The fate of the CLARITY Act, a bipartisan bill aiming to regulate the crypto market in the US, has taken a turn for the worse. Galaxy Research, a prominent financial and cryptocurrency research firm, has reduced its estimate for the bill's passage from 50% to 30%. This downward revision comes after lawmakers published the combined legislative text of the 616-page bill.

The CLARITY Act combines proposals from the Senate Agriculture Committee and Senate Banking Committee with new provisions covering ethics, enforcement, stablecoins, and custody rules. The bill contains 104 numbered sections across four divisions and preserves several industry priorities, including developer protections, self-custody safeguards, and rules for digital asset intermediaries.

The main challenge facing supporters of the bill is the vote calculation. Lawmakers need to secure 60 votes to overcome a Senate filibuster, but even this may not be enough given the tight legislative window before the August recess. The ethics provisions have become a major point of disagreement, with some lawmakers pushing for stronger safeguards around conflicts of interest and financial crime.

The crypto industry is watching the legislative process closely, as the CLARITY Act would establish federal rules for digital asset classifications, exchange oversight, custody requirements, and regulatory responsibilities between the SEC and CFTC. The uncertainty surrounding the bill's fate has added to the challenges faced by crypto businesses and investors seeking clearer rules for operating in the US.