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CLARITY Act Momentum Slows As Approval Odds Fall To 60%

CLARITY Act Momentum Slows As Approval Odds Fall To 60%

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A July 4 target date for advancing crypto market-structure legislation through the Senate is now looking less certain, according to Galaxy Digital’s head of research.

Senate Calendar Creates A Bottleneck

Alex Thorn revised his probability estimate for the CLARITY Act passing in 2026 from 75% down to 60%, citing a Senate schedule that has grown increasingly crowded with competing priorities.

Next week’s agenda is expected to be taken up largely by FISA-related business following a failed reauthorization vote, leaving little room for crypto legislation to advance.

Thorn said the obstacle is no longer political will — support for the bill has not collapsed. The problem is time.

Unresolved Issues Add To The Delay

Two sticking points remain on the table: lawmaker ethics rules and illicit finance provisions tied to the bill. Neither has been resolved, and the lack of movement on both fronts has further complicated the path forward.

Despite the lowered odds, Thorn said he remains optimistic about the bill’s eventual chances — though he cautioned that the timeline is now more fluid than many had assumed.

The CLARITY Act is widely considered the most consequential crypto legislation currently before Congress. Its central aim is to settle a long-running dispute between the Securities and Exchange Commission and the Commodity Futures Trading Commission over who regulates what in the digital asset space.

Under the proposal, tokens classified as commodities would fall under CFTC oversight, while those deemed securities would stay with the SEC — a distinction that would reshape how exchanges operate and what compliance requirements apply to crypto projects.

Supporters say federal clarity on those boundaries would cut regulatory uncertainty and keep crypto development from migrating abroad.

A Window That May Be Closing

Senator Cynthia Lummis had previously pointed to July 4 as a marker for getting market-structure legislation moving in the Senate.

Thorn’s revised figure puts pressure on that informal target. His assessment reflects scheduling constraints, not a shift in how lawmakers view the bill itself.

For crypto stakeholders awaiting regulatory certainty, the revised outlook points to a potentially longer path toward comprehensive legislation.

Featured image from Unsplash, chart from TradingView

Is the CLARITY Act a surveillance bill in disguise?

Is the CLARITY Act a surveillance bill in disguise?

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The cryptocurrency sector has been clamoring for regulatory clarity, but concerns about the contents of the CLARITY Act have risen. 

Galaxy Digital’s (NASDAQ: GLXY) research head, Alex Thorn, highlighted sanctions data and surveillance concerns, warning that the CLARITY Act may not be all good news as the community is hoping. 

Is the CLARITY Act a surveillance bill in disguise?

The U.S. Senate has returned from its recess, and debates regarding the Digital Asset Market CLARITY Act have begun; however, Alex Thorn, head of research at Galaxy Digital (NASDAQ: GLXY), has urged caution. 

He warned in a January 2026 client note that while the industry has long wished for regulatory clarity, the current version of the bill contains “fine print” that represents the largest expansion of financial surveillance since the USA PATRIOT Act.

According to an analysis shared by Thorn, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) has historically sanctioned 518 Bitcoin addresses. These addresses have cumulatively received 249,814 BTC, sent 239,708 BTC, and currently hold a net balance of approximately 9,306 BTC, worth roughly $707 million. 

Careful what you wish for: Galaxy's Alex Thorn warns about CLARITY ACT
OFAC-sanctioned addresses. Source: Alex Thorn via X/Twitter

Thorn notes that OFAC’s Specially Designated Nationals (SDN) list is just one tool the Treasury uses today. However, the CLARITY Act would expand these powers significantly, giving the department new tools to intercept illicit assets. 

Thorn warned in March that if the CLARITY Act does not pass committee by the end of April 2026, the odds of passage this year become “extremely low.” Reports indicate that negotiators are close to a deal on stablecoin yields, but other hurdles remain. 

Supporters on the Senate Banking Committee argue the CLARITY Act is designed to “crack down on illicit finance” while protecting software developers and promoting innovation. The official summary states the bill gives law enforcement “new, targeted tools to combat money laundering, terrorist financing, and sanctions evasion.”

Aside Thorn, Cardano founder Charles Hoskinson argues the language goes too far. Hoskinson has warned that the legislation’s broad provisions could be exploited by future political administrations, regardless of which party is in power. 

The fact that the bill automatically classifies new digital tokens as securities with virtually no pathway to reclassification is also an issue, as it stifles competition. 

One independent analysis of a previous draft noted that while the bill includes a “Keep Your Coins Act” preventing bans on self-custody, it contains loopholes that still allow for government intervention regarding illicit finance. 

The introduction of “Distributed Ledger Application Layers” in the draft could also create compliance obligations for software applications that could force DeFi interfaces to monitor users.

Who benefits from the new rules?

Wall Street giants, including JPMorgan Chase & Co. (JPM) and Citadel LLC, are actively lobbying the SEC to ensure tokenized securities do not receive special treatment.

In a recent letter to the SEC, Thorn argued that “forcing a new architecture to clone the old one” is not technology neutrality. Instead, he suggests that a decentralized automated market maker (AMM) should not be classified as an exchange because it is “autonomous code” and not an organization of persons operating a marketplace.

Thorn argues that liquidity providers (LPs) on AMMs are simply traders using their own balance sheets, not dealers serving customers. 

He warns that banks and brokerages are playing a cynical game where they publicly back Bitcoin but use their Washington lobbyists to delay real integration that would threaten their control over market structure.

According to JPMorgan analysts, the legislative disputes have narrowed to two or three core questions, primarily revolving around stablecoin rewards. 

The tentative compromise would ban passive “idle yield” on stablecoins, because banks fear it would drain deposits, while allowing activity-based rewards. However, critics like Ryan Adams argue that if banks succeed in killing yield provisions, it proves the Senate is prioritizing bank interests over the public.

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