- The Senate adjourned for August recess without voting on the CLARITY Act, but a procedural vote is scheduled for September 15.
- Prediction markets show only a 19% chance of the bill becoming law in 2026, down from 82% in February.
- Stablecoin rewards remain a major sticking point, with community banks warning of a $1.3 trillion deposit drain.
- White House officials and Senator Cynthia Lummis push back, citing data that deposits are actually rising.
Prediction markets reflect the growing skepticism. Polymarket currently puts the odds of the CLARITY Act being signed into law in 2026 at just 19%, a dramatic drop from the 82% seen in February. If the bill fails to pass this year, it will have to start from scratch when the 120th Congress convenes in January, meaning another round of House approval before it can return to the Senate. Both banks and crypto companies are left waiting, with neither side getting what they wanted before the break.
Senate Recess and the September Vote
The procedural vote on September 15 is not a final vote but a cloture motion on the motion to proceed. Cloture requires 60 votes to limit debate and avoid a filibuster. Whether those 60 votes exist is still unclear. Senate Majority Leader John Thune filed the cloture motion in the early hours of Saturday, setting up a potential vote after the recess. However, as Ari Redbord, global head of policy at TRM Labs, noted, “Neither party wants to hand the other a win heading into the midterms.” This political reality could stall progress even if the procedural hurdle is cleared.
The bill already passed the House in 2025 with a strong bipartisan vote of 294–134, and it cleared the Senate Banking Committee in May by a 15–9 margin. But the Senate has been negotiating its own version, with several key issues still unresolved. These include the exact division of regulatory authority between the SEC and CFTC, how to treat stablecoin rewards, and protections for DeFi developers. The cloture filing is a meaningful step, but it does not guarantee passage.
Stablecoin Rewards Spark Banking Battle
One of the most contentious issues is whether stablecoin holders should be allowed to earn rewards or yield. The Genius Act, signed into law last summer, prohibits stablecoin issuers from paying interest directly to users, but it allows third-party intermediaries like exchanges to offer rewards. The CLARITY Act aims to clarify this, and banks are pushing for stricter limits. Community banks fear that yield-bearing stablecoin holdings could drain up to $1.3 trillion from their deposits, reducing lending by $850 billion, according to the Independent Community Bankers of America (ICBA). Paul Merski, ICBA’s executive vice president, called it “a threat to the economy.”
However, Senator Cynthia Lummis pushed back on these concerns, citing data from Bank of America and FDIC reports showing deposits actually rising this year. She noted that community banks posted 5% deposit growth, outperforming the industry. “Killing the Clarity Act won’t help community banks. It just protects the status quo they say is broken,” she said. The Banking Committee has also included a nine-provision community bank package in the housing bill to provide regulatory relief for banks under $10 billion in assets.
Crypto Industry Seeks Regulatory Certainty
For the crypto industry, the CLARITY Act represents a chance to gain legitimacy and clear regulatory rules. A March YouGov survey found that 63% of adults do not trust cryptocurrencies, compared to 27% who distrust banks. The bill would provide a statutory framework that cannot be easily reversed by future administrations. White House crypto advisor Patrick Witt confirmed the administration is “fully committed” to passing the bill in September, warning that delays jeopardize America’s leadership in global financial markets. He urged Democrats to support the bill, saying “our door remains open.”
The SEC and CFTC have already released joint guidance on how federal securities laws apply to digital assets, but that guidance can be revised. Legislation, as TRM Labs’ Redbord put it, “gives the framework something built to last.” The bill also includes provisions for regulated on-chain markets, as well as protections for software developers and network participants, while preserving anti-fraud enforcement authority.
What’s Next for the Bill
If the Senate fails to invoke cloture on September 15, the bill could be delayed indefinitely. With midterm elections in November, legislative activity is expected to slow dramatically. If Democrats retake the House, Merski said it is “unlikely there’ll be much action” on the CLARITY Act. Even if the bill passes the Senate, it would need to be reconciled with the House version, adding another layer of complexity.
Despite the obstacles, supporters remain optimistic. The bill has already overcome significant hurdles, and the cloture filing shows momentum. As one industry advocate noted, “We can’t allow all the work that has been put into this effort to be for naught.” The future of on-chain finance in the U.S. depends on statutory certainty, and the CLARITY Act, while not perfect, is seen as essential to maintaining American leadership in the field.
In the coming weeks, all eyes will be on the Senate floor. The September 15 vote will be a critical test of whether bipartisan support can overcome partisan gridlock. If it fails, the bill may be shelved until 2027, leaving both banks and crypto companies in a state of uncertainty. But if it succeeds, it could mark a turning point for digital asset regulation in the United States, providing a durable framework that balances innovation with investor protection.