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Key Takeaways
- Bernstein says a failed Clarity Act would likely spark a near-term crypto selloff, though it expects the setback to be temporary.
- The SEC and CFTC are expected to keep expanding rulemaking under Project Crypto even if the bill stalls.
- J.P. Morgan issued a similar warning last week, citing fading Senate odds for passage this year.
Bernstein said a failure to pass the Clarity Act this year would likely trigger another selloff in crypto markets, even as the brokerage expects U.S. regulators to accelerate rulemaking without the legislation.
Analysts led by Gautam Chhugani wrote in a Monday note that the bill’s odds of passing in 2026 are dwindling as the Senate runs low on time before recess, despite lawmakers resolving disputes over stablecoin yield rules.
Bernstein’s Warning on Market Impact
Bernstein’s analysts called the Clarity Act the most consequential crypto market structure bill in U.S. history, and said its chances of 2026 passage are fading.
A failure to pass the bill would likely trigger an immediate negative reaction across digital assets, the analysts wrote. They characterized the setback as probably temporary rather than a lasting shift in the industry’s trajectory.
The Senate has not scheduled a final vote on the bill. Its progress remains at the negotiation stage, with contentious provisions such as stablecoin yield rules resolved, but overall passage still uncertain before the chamber’s recess.
Why Regulators Could Move Anyway
Bernstein’s analysts said the SEC and the CFTC would likely expand rulemaking under the Trump administration’s Project Crypto initiative even if the legislation stalls. They pointed to token classification rules, DeFi guidance, self-custody rules and innovation exemptions for token issuance as areas where the agencies could act without new legislation.
The firm also said it expects continued regulatory support for tokenization, crypto derivatives and prediction markets regardless of the bill’s fate.
Passing the Clarity Act would still carry weight beyond near-term price action, according to the note. Bernstein’s analysts said the bill would provide permanent regulatory certainty, clarify the division between securities and commodities oversight, and give banks, broker-dealers and exchanges a stronger basis to invest in blockchain infrastructure across future administrations.
Even if the bill fails to advance this year, Bernstein’s analysts expect the crypto industry’s political influence to remain strong heading into the U.S. midterm elections. The firm projected the current market downturn would end in the late third or early fourth quarter, aided by continued White House policy support for the sector.
The note did not specify a firm date for the Senate to revisit the legislation after recess.
Effect on Listed Stablecoin Issuers
A stalled Clarity Act would preserve the current regulatory status quo for stablecoins, according to Bernstein. Coinbase would continue offering yield on idle stablecoin balances under existing rules, the analysts said.
Circle, as a stablecoin issuer, would remain unable to offer yield directly but could continue sharing distribution economics with partner platforms. Bernstein said a recovery in USDC supply growth remains the key catalyst for renewed momentum in both Coinbase and Circle shares, independent of the bill’s outcome.
A Second Wall Street Warning
Bernstein’s note follows a similar warning from J.P. Morgan last week, which said fading prospects for Senate passage of the Clarity Act this year represent a setback for the crypto industry. J.P. Morgan said further delays could weaken one of the sector’s most significant regulatory catalysts.
Both notes state that legislative delay carries near-term market risk, while pointing to continued regulatory movement through existing agency authority as a partial offset.
What Supporters Say Is at Stake
Supporters of the Clarity Act have argued the bill would establish clear rules for digital assets, reduce regulatory uncertainty and unlock broader institutional adoption. Supporters say passage would be widely viewed within the industry as a step toward giving banks, asset managers and exchanges more confidence to build out blockchain infrastructure and expand crypto product lines.
Bernstein’s analysts framed the bill’s importance in similar terms, tying its long-term value to giving the industry a durable legal framework rather than one dependent on the priorities of a single administration.
