When Will the CLARITY Act Finally Pass? A Timeline, Political Standoff, and Industry Outlook
By [Your Name] – February 16 2026
The United States’ long‑awaited CLARITY Act—the bill meant to overhaul how federal agencies regulate digital assets and decentralized finance (DeFi)—has once again stalled in the Senate. After a rapid House approval in July 2025 and several months of intensive Senate debate, the legislation now faces a crossroads of partisan disagreement, industry push‑back, and looming electoral pressures. Below is a consolidated view of the bill’s progress, the major points of contention, and what analysts expect for its eventual fate.
1. How the Bill Got Here
| Period | Milestone | Significance |
|---|---|---|
| May 2025 | Introduced by Rep. French Hill (R‑PA) in the House Financial Services Committee. | Set out a framework aimed at “clear, functional requirements” for digital‑asset participants while emphasizing consumer protection and innovation. |
| June‑July 2025 | Fast‑tracked through House committees and passed the full House 294‑134. | Gained strong Republican backing (216‑0) and modest Democratic support (78‑134). The vote sent the measure to the Senate for further work. |
| July‑Sept 2025 | Senate Banking Committee released a draft version. Chair Tim Scott (R‑SC) projected a September 30 deadline for Senate action. | The draft sought to delineate securities vs. commodities, modernise the regulatory regime, and position the U.S. as a global crypto leader. |
| Oct‑Nov 2025 | Government shutdown (Oct 1‑Nov 12) disrupted Senate deliberations; Democrats, led by Sen. Elizabeth Warren, raised concerns over tax treatment and anti‑money‑laundering provisions. | Highlighted the ideological split: Democrats favour retrofitting existing frameworks, while Republicans and many industry players push for a bespoke system. |
| Dec 2025‑Jan 2026 | White House’s crypto‑AI adviser David Sacks announced a planned markup; the session was later postponed after lobbying from Coinbase and other firms. | The bill’s stable‑coin‑yield ban and its designation of the SEC as the lead regulator proved unacceptable to major exchanges. |
| Jan 27 2026 | Senate Agriculture Committee held its own markup, attempting to add ethics rules and a bailout prohibition. The Republican majority advanced the text to the Senate floor. | Demonstrated that even within the Senate the bill is being shaped by competing committee agendas. |
| Feb 2026 | High‑level White House meetings with crypto executives (e.g., Digital Chamber of Commerce, Ripple) focused on stable‑coin‑yield provisions. No consensus reached. | Ongoing negotiations indicate the bill is still in a “productive but unresolved” phase. |
2. Core Points of Contention
| Issue | Republican / Industry Position | Democratic Position |
|---|---|---|
| Regulatory Lead Agency | Preference for a new, dedicated framework or CFTC‑centric oversight. | Argues for leveraging the SEC’s existing securities authority to avoid regulatory duplication. |
| Stable‑Coin Yield Products | Strong opposition; the draft bans interest‑bearing stablecoins, citing deposit safety. | Some Democrats share the concern, but many question whether a blanket ban is necessary. |
| Bailout Provisions | Democrats want an explicit prohibition on federal bailouts of crypto firms. | Republicans have rejected this provision, viewing it as an unnecessary limitation on market flexibility. |
| Tax Treatment | Democrats fear the bill could give crypto an unfair tax advantage and hinder AML monitoring. | Republicans argue the tax language provides needed clarity for investors. |
| Ethics Clause | Senate Democrats have introduced a rule barring members of Congress from trading crypto while in office. | Republicans have not embraced the clause, viewing it as overreach. |
Industry giants such as Coinbase and Goldman Sachs have publicly withdrawn support, citing the stable‑coin‑yield ban and the SEC‑centric model as deal‑breakers. Their opposition has intensified pressure on Senate leaders, particularly as the White House’s crypto‑focused office pushes for a swift resolution.
3. Political Calculus
- Midterm Election Clock – Both parties anticipate a significant legislative push before the 2026 elections. A clear framework could be a boon for incumbents seeking to claim regulatory leadership, while a stalemate may be used by opponents to criticize perceived inaction.
- Bipartisan Momentum – Early House voting showed a rare, if limited, bipartisan coalition. However, Senate dynamics reveal a deeper partisan split, especially on consumer‑protection versus market‑innovation priorities.
- Lobbying Dollars – Crypto‑related Political Action Committees have amassed sizable war chests for the upcoming campaign cycle, intensifying the urgency for a legislative win that can be touted to donors.
- Public Sentiment – Polling indicates waning favorability for the Republican Party; a crypto‑focused bill could become a liability if the party’s overall brand suffers further erosion.
4. Analyst Outlook
- Short‑Term (Next 60 days): Expect continued “productive” White House‑industry meetings. The Senate Banking Committee is likely to schedule another markup before the end of March, but a floor vote remains uncertain.
- Mid‑Term (Q2 2026): A compromise that softens the stable‑coin‑yield ban—perhaps allowing modest yields under a custodial framework—could unlock sufficient industry backing to push the bill forward.
- Long‑Term (Beyond Q2 2026): If partisan deadlock persists, the CLARITY Act may be delayed until after the 2026 midterms, at which point a new congressional composition could reshape the debate entirely.
Market analyst Michaël van de Poppe likens the current stalemate to Europe’s MiCA rollout, noting that “the extended negotiation period may actually produce a more balanced regulatory regime, provided all sides stay engaged.”
5. Key Takeaways
- The CLARITY Act is alive but stalled – Senate negotiations are ongoing, with no definitive passage date.
- Stable‑coin yields are the biggest hurdle – The ban on interest‑bearing stablecoins has alienated major exchanges and will need to be re‑examined.
- Partisan divide is deepening – Democrats focus on consumer protection, tax fairness, and anti‑bailout safeguards; Republicans and industry push for an innovation‑friendly framework.
- Election timing matters – Both parties have incentives to resolve the bill before the 2026 midterms, yet political risk calculations could also delay action.
- Industry influence is growing – Crypto firms and financial institutions are actively shaping the legislative language through lobbying and White House meetings.
Bottom line: The CLARITY Act’s future hinges on whether lawmakers can bridge the regulatory‑innovation gap that currently separates Republicans and the crypto industry from Democratic consumer‑protection demands. Until a compromise is reached, the U.S. crypto market will navigate an uncertain regulatory horizon, with investors watching closely for any sign of legislative movement.
Source: https://cointelegraph.com/news/when-will-crypto-clarity-act-law-pass?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
