Crypto Market Has 'Definitely Not Priced In' Clarity Act Surprise, Says Bernstein

Bernstein analysts warned that financial markets appear to be underestimating the chance of a positive surprise on the Clarity Act after Republicans made concessions on ethics enforcement and protections for community-bank deposits. The firm’s client note, led by Gautam Chhugani, said markets have not priced in a favorable outcome as senators prepare for a procedural vote on Tuesday.

The Clarity Act aims to create federal rules for digital assets and to clarify whether the Securities and Exchange Commission or the Commodity Futures Trading Commission has authority over specific crypto activities. Moving the bill forward requires Democratic support, and that backing has been complicated by disputes over officials’ crypto holdings and by debate over whether stablecoin-related rewards could draw deposits from community banks.

Republican sponsors say their most recent draft, released Sunday, incorporates 126 changes requested by Democrats and adds a role for state attorneys general in enforcing ethics restrictions; President Donald Trump has agreed to those revised limits. Sen. Cynthia Lummis, who chairs the Senate Banking Subcommittee on Digital Assets, urged Democrats to accept the revisions, asserting Republicans had addressed their concerns. Bernstein noted the enforcement change, along with potential divestment or blind-trust requirements, could convince some Democrats to support advancing the legislation.

Not all analysts are convinced a deal is imminent. TD Cowen analyst Jaret Seiberg called the package a final product presented to Democrats rather than a negotiated agreement and maintained a 25% probability of enactment this year. Beacon Policy Advisors lifted its odds to 30%–40% from below 10%. The latest proposal would also allow the Treasury to restrict stablecoin rewards if those payments prompt substantial withdrawals from community banks — a point of contention between banking groups, who warn deposit erosion could hurt lending, and crypto advocates, who want rewards preserved.

If Congress does not pass the Clarity Act, the Commodity Futures Trading Commission plans to pursue crypto rules using authorities it already holds; CFTC Chair Michael S. Selig has instructed staff to explore those options but says legislation would create protections that are more durable across administrations.