Bernstein: Crypto Markets Miss Clarity Act Progress

Crypto markets have not priced in a positive surprise regarding the Clarity Act, Bernstein analysts stated. The firm noted that recent Republican concessions on ethics enforcement remain undervalued by traders. This assessment comes ahead of a Senate procedural vote scheduled for Tuesday.

Bernstein analysts led by Gautam Chhugani wrote in a client note that any positive outcome is definitely not reflected in current asset prices. The team believes the latest draft incorporates specific changes that could alter the political landscape for the bill. These changes include new protections for community bank deposits and revised ethics rules.

Republican Draft Incorporates Key Concessions

Republican sponsors released a revised draft on Sunday containing 126 changes requested by Democrats. The update grants state attorneys general a role in enforcing ethics restrictions. President Donald Trump has agreed to these revised restrictions on official crypto holdings.

Sen. Cynthia Lummis, chair of the Senate Banking Subcommittee on Digital Assets, urged Democrats to support the revised bill. She stated that the text is ready after a year of intense bipartisan negotiations. Lummis emphasized that Democrats received their demanded changes and should now accept the legislation.

The proposal also allows the Treasury to restrict stablecoin rewards if they cause substantial withdrawals from community banks. Banking groups argue these payments draw away deposits used for lending. Crypto advocates have lobbied to preserve these rewards mechanisms.

Analysts Disagree on Passage Odds

Market participants remain divided on the likelihood of enactment. TD Cowen analyst Jaret Seiberg maintains a 25% probability of the bill passing this year. He described the current situation as a final product rather than a negotiated deal.

Beacon Policy Advisors raised its estimate of passage from below 10% to a range of 30% to 40%. This shift reflects the impact of the new ethics and banking provisions. The firm sees the concessions as sufficient to persuade some Democratic senators to advance the vote.

Regulatory Alternatives If Bill Fails

If Congress fails to pass the Clarity Act, the CFTC plans to use existing powers to pursue crypto rules. CFTC Chair Michael S. Selig has directed staff to explore these regulatory options. He stated that legislation would provide protections that are harder for future administrations to undo. According to GN markets/crypto (en-US), this regulatory pivot remains a key risk for the sector.