The odds of the United States passing its most consequential crypto market structure bill are slipping fast, and one of Wall Street's most watched brokerages says the consequences could be severe. Bernstein analysts told clients on Monday that failure to pass the Clarity Act in 2026 would likely trigger an immediate negative reaction across digital assets, sending bitcoin and the broader crypto market to another leg lower. The brokerage had previously flagged late third or early fourth quarter as the likely end of the current downturn, but that timeline hinges partly on regulatory progress. "Clarity is the most consequential crypto market structure bill in U.S. history, but the chances of its 2026 passing seems to be dwindling," wrote analysts led by Gautam Chhugani in the report. Passage odds have fallen to 34 percent as the Senate runs out of time before its recess, having resolved some contentious issues including stablecoin yield rules but still facing the 60-vote threshold and partisan disputes.
What the Clarity Act Would Do
The legislation is widely viewed as the crypto industry's most important piece of U.S. law. It would establish clear rules for digital assets, reduce regulatory uncertainty, and unlock broader institutional adoption. Supporters argue that passage would give banks, asset managers, and exchanges the confidence to invest in blockchain infrastructure and expand crypto products. The bill would also clarify the division between securities and commodities oversight, establish a long-term framework for decentralized finance, and create innovation exemptions for token issuance. That permanent regulatory certainty is what makes the bill strategically critical regardless of which political administration holds power.
The Fallback: Project Crypto
Even if the legislation stalls, Bernstein expects regulators to respond by accelerating rulemaking under the current administration's Project Crypto initiative. The Securities and Exchange Commission and the Commodity Futures Trading Commission are expected to move more quickly on token classifications, DeFi guidance, self-custody rules, and innovation exemptions. The brokerage also expects the crypto industry's political influence to remain strong ahead of the U.S. midterm elections, which could create additional pressure for legislative action in 2027.
Impact on Listed Companies
For publicly traded crypto companies, a failure to pass the Clarity Act would preserve the regulatory status quo. Coinbase would continue offering yield on idle stablecoin balances, while Circle would remain unable to do so directly as an issuer but could continue sharing distribution economics with partners. A recovery in USDC supply growth remains the key catalyst for renewed momentum in both stocks. The warning echoes concerns raised by JPMorgan last week, which said fading Clarity Act prospects are a setback for crypto and that further delays could undermine one of the industry's biggest regulatory catalysts. The Clarity Act saga also connects to broader regulatory uncertainty, as seen when the GENIUS Act deadline for final stablecoin rules was missed and when the SEC froze the Nasdaq Bitcoin Options launch after CME challenged its jurisdiction.
Market Context
Bitcoin was trading near $63,750 at the time of the report, up roughly 1.6 percent over 24 hours as broader equity markets rallied. The S&P 500 posted its best opening day to a month in nearly four years, gaining 1.5 percent, while the Nasdaq rose 2.1 percent. Crypto-related stocks like Galaxy Digital and Robinhood were up 4 to 5 percent. Despite the short-term gloom if the bill fails, Bernstein's broader thesis remains intact. The brokerage sees the current downturn ending by late Q3 or early Q4, helped by further White House policy support and the expectation that regulators will fill the legislative void with accelerated rulemaking. The question for crypto investors is whether that regulatory backstop is enough to prevent another flush lower in the meantime.
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