Analysts at Bernstein argue that crypto markets have yet to factor in a favorable outcome on the Clarity Act, despite revisions made by Republicans addressing ethics enforcement and safeguards for community-bank deposits. The procedural vote is scheduled for Tuesday.
The analysts’ note comes as the Senate prepares to hold a vote on the bill’s path forward. Passage would require Democratic support, which has been complicated by disputes over officials’ crypto holdings and stablecoin rewards.
The Republican Draft
Sunday saw Republicans release a revised edition of the Clarity Act, adopting 126 alterations requested by Democrats. Among the modifications is a provision granting state attorneys general a part in carrying out ethics restrictions, with President Donald Trump having consented to the amended conditions.
The chair of the Senate Banking Subcommittee on Digital Assets, Sen. Cynthia Lummis (R., Wyo.), asked Democrats to support the revised bill, arguing that Republicans had answered their concerns.
“After a year of intense daily bipartisan negotiations, this bill is ready,” Lummis said in a statement. “Democrats got what they wanted; now they need to take yes for an answer.”
Key Changes
The earlier versions of the bill entrusted the Justice Department with enforcing the ethics provision, which centers mainly on President Donald Trump’s crypto enterprises. Bernstein argued that the shift, combined with divestment or blind-trust demands, might win over some Democrats and help move the legislation forward.
The newest plan would allow the Treasury to limit stablecoin rewards when they prompt large withdrawals from community banks. Banking groups say such payments might pull away deposits that fund lending, while crypto supporters wish to keep the rewards in place. Each side has pushed senators in their own states.
A September 10 draft kept ethics provisions largely untouched, instead adding registration requirements for crypto trading protocols controlled by people or groups.
Skeptics Still Doubt
Monday’s note from TD Cowen analyst Jaret Seiberg offered a different view on the bill, arguing that it has not emerged from negotiations between parties.
He wrote “This is not a negotiated deal. Democrats are being presented with the final product,”.
Beacon Policy Advisors increased its estimate for enactment this year to 30%-40%, up from below 10%, while Seiberg kept his own probability at 25%.
“We reckon any positive surprise is definitely not priced in.”
What Happens Next
The CFTC is preparing to move forward with crypto rules using its existing authorities if Congress does not pass the Clarity Act. Chair Michael S. Selig has instructed his staff to examine those rules. He argues that legislation would create protections that future administrations would find harder to undo.
Analysts say the market’s reaction will depend on whether Democrats respond to the concessions. Bernstein’ has yet to fully account for a favorable result when it comes to Tuesday’s vote.
The analysts’ confidence stands in contrast to Seiberg’s doubt. Bernstein sees a priced-in surprise; Seiberg sees a bill Democrats never negotiated into existence.
- Republicans released a revised draft with 126 changes requested by Democrats.
- State attorneys general gain a role in enforcing ethics restrictions.
- The Treasury gains power to restrict stablecoin rewards tied to bank deposits.
- Banking groups and crypto advocates are lobbying senators in their home states.
The vote tests whether the concessions were enough.
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