Bernstein: The failure of the CLARITY Act may trigger a new round of declines in the cryptocurrency market

According to Cointelegraph, investment firm Bernstein stated that the prospects for the passage of the U.S. CLARITY Act are declining. If the Senate fails to advance the bill before the recess, it may trigger a short-term negative reaction in the market, putting further pressure on the valuations of Bitcoin and the overall crypto assets.

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 may also prompt the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to accelerate regulatory actions, including clarifying token classification rules, developing a regulatory framework for decentralized finance (DeFi), and advancing token issuance exemption mechanisms.

Bernstein expects that the crypto market may bottom out between the end of the third quarter and the beginning of the fourth quarter, gradually regaining momentum before the U.S. midterm elections.

Currently, market expectations for the CLARITY Act to be signed into law by the end of 2026 continue to decline. Data from 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 down 9 percentage points from the past month, with related betting amounts around $3.7 million.

The CLARITY Act aims to establish the first regulatory framework for the digital asset market in the U.S., but it faces opposition from the banking industry due to stablecoin yield provisions. Previously, Galaxy Digital had lowered the probability of the bill being enacted by 2026 to 50% and warned that the Senate's advancement timeline is shrinking.