Eleanor Terrett: Why CLARITY Is Likely To Happen This Year (Detailed Explanation)

Eleanor Terrett described the CLARITY Act as moving under genuine urgency but without the Senate votes currently in hand to pass it. Republicans hold approximately 53 seats and need around 10 Democrats to reach the 60 votes required to invoke cloture. Senate Majority Leader Thune is unlikely to call a vote this week because the Iran-Russia sanctions bill has taken priority, pushing any cloture vote to potentially next week at the earliest. August recess begins next week, and even after cloture there are procedural steps including a motion to proceed, amendment debates, and 30-hour windows between each stage, making the timeline extremely tight. There is precedent for lawmakers staying past recess for major legislation like reconciliation packages but none for a crypto bill.

The ethics language is the most contentious issue in negotiations. Text released last Wednesday would prohibit the president, vice president, their spouses, members of Congress, and other government officials from issuing or sponsoring digital assets while in office, with a sunset clause expiring in 2029 that effectively limits enforcement to within Trump's presidency. Democrats said the White House framework did not go far enough. The central sticking point is whether state attorneys general should have enforcement power, which Democrats want and Republicans and the White House oppose. New York AG Leticia James has already sued crypto exchanges and individuals, recently sent a letter opposing the CLARITY Act, and a state AG took over the same lawsuit against Coinbase that the SEC dropped after the Trump administration took office. Republican senators cite exactly this pattern as motivation to pass legislation now before a future Democratic administration can use enforcement powers against the industry. Senator Tom Tillis is leading ethics discussions with Senator Ruben Gallego of Arizona, but Terrett emphasized that any compromise must be acceptable to Trump personally or there is no bill. Trump has made over a billion dollars while in office over the last 18 months, largely through his meme coin and World Liberty Financial.

Democratic reluctance extends beyond ethics. Many Democrats on Capitol Hill have not recovered from the FTX scandal and continue to treat crypto as synonymous with FTX and Sam Bankman-Fried, and the industry has become a partisan issue partly because of that episode. Democrats are also reluctant to support legislation that would appear to legitimize an industry from which the Republican president has personally profited. Terrett argued this is strategically mistaken, pointing to provisions in the bill that would give crypto customers bankruptcy remoteness protections equivalent to those of traditional financial platform customers and that are designed to prevent another FTX-style collapse.

The Blockchain Regulatory Certainty Act, authored by House Majority Whip Tom Emmer and embedded in CLARITY, is one of approximately three core Democratic objections. The BRCA would protect blockchain and software developers from criminal liability if third parties use their published code for illicit purposes such as money laundering. Terrett connected this to cases involving Roman Storm and the Samourai Wallet developers, arguing that criminal liability fears have pushed crypto businesses offshore. Law enforcement groups have been vocal that the BRCA limits prosecutors' ability to pursue on-chain crime, though some police groups have recently come out supporting the overall bill even with the BRCA included. Senator Catherine Cortez Masto of Nevada, described as a key vote, released proposed BRCA language she said resulted from talks with the White House and Treasury Department, but both publicly stated her language was not agreed to by them, called it non-negotiable, and said it was far from what they are trying to achieve and damaging to software developers.

Prediction markets placed the probability of CLARITY passing in 2026 at around 37 percent for most of the prior week before dropping to approximately 30 percent. Terrett said she believes the true probability is above 30 percent and that a strategy exists to potentially get the bill done by September, while acknowledging that deadlines around crypto legislation have repeatedly shifted and nothing is done until it is done.