Expectations and uncertainty are rising at the same time around the Clarity Act, a U.S. bill to regulate crypto market structure.

On July 18, blockchain outlet CoinPost reported that former House Financial Services Committee chairman Patrick McHenry called it the most important technology legislation since the 1996 Telecommunications Act. But prediction markets put the probability of the bill becoming law by Dec. 31, 2026 at 32 percent.

McHenry, a former congressman from North Carolina, wrote in an opinion piece for U.S. business magazine Fortune that the Clarity Act is different from past financial reforms. He said laws such as the Dodd-Frank Act introduced after the 2008 financial crisis were limited to post-crisis responses, while the Clarity Act is comprehensive financial policy ahead of a crisis. He also called it the first attempt since the Gramm-Leach-Bliley Act (GLBA) about 30 years ago.

He particularly compared it to the 1996 Telecommunications Act. The act was a U.S. communications regulatory framework prepared just before the internet was commercialised, and is seen as having laid the groundwork for the growth of IT companies and U.S. technological dominance through provisions such as liability exemptions for service providers. McHenry argued that when there is a clear regulatory framework, entrepreneurs can build businesses with confidence, and that an appropriate framework in crypto could play the same role as it did during the internet’s expansion.

The possibility of bipartisan support in politics has also been mentioned. McHenry said the Genius Act, a stablecoin regulation bill, has already passed with bipartisan support in both chambers, and that broad bipartisan backing is forming for the Clarity Act as well. With other countries rushing to put regulations in place, he said passage of the Clarity Act is the best way to keep the United States at the centre of global capital markets.

But the market is more cautious. On prediction market platform Polymarket, the probability of the Clarity Act becoming law by the end of 2026 fell to a record low of 32 percent. That is about 50 percentage points lower than the peak of 82 percent recorded in February. Since early May, downside pressure has increased as the Senate review schedule was scaled back.

The biggest variable dragging down the bill’s prospects is an ethics clause. The clause would limit senior government officials, including the president, vice president and members of Congress, from profiting from crypto-related businesses while in office. After U.S. President Donald Trump’s financial disclosures showed crypto-related income exceeding $1 billion, Democrats intensified calls to strengthen the provision.

Democratic senators Chris Van Hollen, Chris Murphy and Jeff Merkley said they would oppose the Clarity Act unless the ethics issue is resolved. Senators Ruben Gallego and Angela Alsobrooks, who voted in favour during committee review, are also demanding the ethics clause be overhauled as a condition for supporting it on the Senate floor. Republicans are also in no position to be optimistic about moving the bill forward.

Trump discussed the ethics clause on July 16 with senators Cynthia Lummis and Bernie Moreno, but as of July 17 no official agreement had been reached. The Senate resumed its session on July 13, and there are only about 4 weeks to consider the bill before the summer recess on Aug. 7.

These scheduling constraints are darkening the outlook for the bill. Alex Thorn, head of research at Galaxy Digital, said the Senate is expected to consider the National Defense Authorization Act alongside the Clarity Act, adding: "The next 4 weeks are likely to be the last chance to enact the Clarity Act in this session."

Ultimately, the Clarity Act is being seen as a core bill that will determine the direction of the U.S. crypto regulatory framework, while facing practical hurdles of ethics-clause negotiations in the Senate and a tight legislative calendar. The main point to watch is whether it can reduce Democratic defections in the coming weeks and whether Republicans can reliably secure a quorum for a vote.