The Clarity Act's prospects for passage deteriorated Tuesday as Republicans rejected a Democratic counterproposal, leaving negotiations at an impasse ahead of a critical Senate procedural vote.
Senator Cynthia Lummis, a leading Republican negotiator on the bill, said Democrats' offer showed little movement from their pre-recess positions. "Senate Democrats' counter offer looks identical to their opening position at the start of recess," Lummis stated. "Republicans have moved substantially on every front, including agreeing to nearly all of the Tillis-Gallego ethics framework, while Democrats have not budged an inch."
Prediction market activity reflected the setback. On Polymarket, the probability of the Clarity Act becoming law in 2026 fell to 14% Tuesday morning from approximately 30% the previous day. On Kalshi, traders pushed expected timelines further out: the contract for a crypto market structure bill passing before October 1, 2027, declined to 36% from around 53% Monday morning.
Longer timelines gained traction among traders. The probability of passage by January 1, 2028, reached 51% on Tuesday, compared to earlier Monday assessments that favored a July 1, 2027, deadline at 53%.
The decline followed a surge of optimism Monday after Republicans released what they termed their final draft, incorporating more than 100 changes requested by Democrats. However, opposition mounted from banking groups seeking tighter restrictions on stablecoin interest and rewards, while a bipartisan coalition of state attorneys general cautioned that the legislation could undermine states' ability to police crypto-related fraud.
The Senate scheduled a Tuesday afternoon vote on invoking cloture for the motion to proceed, which requires 60 votes to advance.
