Bernstein: CLARITY Act setbacks may pressure crypto valuations

Expectations for the US Digital Asset Market Clarity Act (CLARITY) are fading as the Senate prepares to begin its summer recess at the end of this week, according to wealth manager Bernstein. With lawmakers stepping away from the calendar, Bernstein warns that the bill’s stalled progress could weigh on crypto valuations again—even as it may also open the door to more active regulator-led rulemaking.

In a Monday report shared with Cointelegraph, Bernstein framed the near-term risk as a possible “industry knee-jerk reaction” if Congress fails to advance CLARITY. At the same time, the firm argued that a legislative setback might prompt the US Commodity Futures Trading Commission (CFTC) and the US Securities and Exchange Commission (SEC) to intensify policy work under their existing authorities through Project Crypto.

Key takeaways

• Bernstein says odds for CLARITY passage appear to be declining as the Senate heads toward summer recess, increasing near-term downside risk for crypto.
• The firm expects a market bottom and improving momentum toward late Q3 or early Q4, but only if conditions evolve as anticipated after the recess.
• Even without congressional progress, Bernstein expects Project Crypto activity—such as interpretive releases and DeFi-related guidance—to accelerate.
• Prediction market activity on Polymarket currently implies only a 31% chance that CLARITY is signed into law by the end of 2026.
• Banking industry pushback remains a key factor behind legislative friction, particularly around stablecoin yield provisions.

Why summer recess could hurt crypto sentiment

Bernstein’s analysis centers on congressional timing. The firm notes that the Senate’s scheduled move into summer recess could reduce the likelihood of CLARITY being passed before lawmakers pause their work. If that happens, Bernstein expects an immediate negative reaction from the industry—an event-driven sentiment hit that could translate into further declines for Bitcoin and the broader market.

However, Bernstein also provided a tactical view of the trade-offs. The analysts suggested that, despite a potential near-term drop, the crypto market could stabilize and start regaining momentum toward late Q3 and early Q4 ahead of the mid-term cycle.

Regulators may move faster under Project Crypto

While Bernstein warned about the consequences of legislative inaction, it also argued that regulatory outcomes could shift in parallel. In the firm’s view, Senate failure on CLARITY may lead the SEC and CFTC to adopt a more proactive stance, accelerating rulemaking and guidance initiatives under Project Crypto.

Project Crypto was first announced by SEC Chairman Paul Atkins in July 2025, and later expanded into a joint staff effort between the SEC and CFTC in September 2025, according to the SEC’s announcement and the CFTC filing describing the initiative. The objective is to create an operational regulatory structure for digital assets using existing agency authority while Congress finalizes broader market legislation under the CLARITY Act.

Bernstein said the two agencies could publish more interpretive materials tied to token taxonomy, develop clearer rules relevant to decentralized finance (DeFi), and speed up an “innovation exemption” for token issuers seeking temporary relief from securities classification during a finite period.

Prediction markets price in lower CLARITY odds

External market signals appear to be aligning with Bernstein’s caution. Polymarket data, cited by the firm, shows odds of the CLARITY Act being signed into law before the end of 2026 at 31%. That represents a drop of 7 percentage points over the past week and 9 percentage points over the past month, with roughly $3.7 million wagered on the outcome, according to Polymarket’s event page: Clarity Act signed into law in 2026.

This is not the first time odds have been revised downward. Earlier coverage from Cointelegraph noted that Galaxy Digital cut its 2026 CLARITY odds to 50% on June 26, warning that the Senate was running out of time to pass the market structure bill before its August recess.

Ethics and banking opposition add to the legislative drag

Beyond scheduling risk, the politics around CLARITY may be influenced by other developments. White House officials are reportedly weighing a bipartisan ethics counterproposal received on Thursday following negotiations between Republican Senator Thom Tillis and Arizona Democrat Ruben Gallego. The proposal would reportedly allow state attorneys general to sue the Department of Justice if it fails to enforce ethics laws against federal officials, according to sources cited by crypto journalist Eleanor Terrett in reporting at Crypto in America.

Separately, the bill continues to face industry pushback—particularly from banking groups. The CLARITY Act is intended to create the first US regulatory framework for digital assets, but banking-sector concerns have focused on how stablecoin yields would be treated. Critics argued that the draft could allow crypto firms to offer yields on stablecoins without being subject to the same requirements as traditional financial institutions.

Cointelegraph previously reported that banking and related groups pushed back on stablecoin yield provisions, including in an article that can be found here: ABA, state banking groups push back on CLARITY Act stablecoin yield provisions.

For investors and builders, the near-term question is whether CLARITY becomes another casualty of legislative timing—or whether regulatory agencies can partially offset congressional delay through Project Crypto releases that clarify token categories and reduce uncertainty for DeFi and token issuance. Over the next few weeks, market participants will likely watch what, if anything, the Senate manages to advance before recess, and whether the SEC and CFTC accelerate guidance in response to a stalled vote count.