What To Expect if Clarity Fails This Week

First, it won’t really die. Second, crypto will march ahead.

If you’re like me, you’re tired of hearing about the Clarity Act. 

To be clear: Congress should pass the bill, and crypto will be better off if it does. The Clarity Act is not a perfect bill, but it is a good one. It would boost the U.S. economy, protect investors, improve ethics protections, and help us compete in the era of onchain finance.

But the landmark piece of crypto legislation has been winding through Congress since May 2025. Its roots trace even further back to an earlier bill called FIT21, which the U.S. House of Representatives passed in May 2024, 804 days ago.

For the past few months, many people—myself included—have been pointing to this week as make or break for the Clarity Act. That’s because the U.S. Senate leaves for its August recess on Friday, August 7, closing up shop until September 14. Under Senate rules, Senators must file for cloture on Clarity by tomorrow, Wednesday, August 5, for the bill to have any chance of a vote before the recess.

Conventional wisdom says that if Congress doesn’t vote on the bill before the August recess it is probably dead, as legislators will soon turn their attention to the November election. Polymarket puts the odds of Clarity passing in 2026 at just 27%, down from 82% in February.

The best-case scenario for crypto is that Clarity passes. If it does, I expect crypto to enter a new bull market. But since that’s the less likely outcome, I thought I’d offer a guide to what to expect if Clarity fails to pass.

First, It Won’t Really Die

Let’s start with the bad news: Even if Clarity fails to pass this week, that won’t give us a final resolution. Instead the bill will enter a “walking dead” state; nothing can actually kill it, but it will lurch along.

As the August deadline approaches, I’ve started to hear chatter that maybe the bill can pass in September. Worse, people have pondered pushing it to December, when Congress returns for a lame duck session. Congress often bundles multiple bills into a year-end “omnibus” package, forcing legislators to vote on a single bill that includes things they like and things they hate. Maybe the Clarity Act can pass that way. After Wednesday’s deadline passes, I expect a steady drumbeat of stories about sneaking Clarity through in the fall or winter.

The reason this is bad news is that uncertainty around Clarity is keeping some professional investors on the sidelines of crypto markets. They don’t want to allocate capital to crypto only to see the Clarity Act fail and send the market lower. They’d rather wait and see how things shake out.

The best thing that can happen if Clarity doesn’t pass this week is that the Polymarket odds break solidly lower—into the teens at least—so we can put the uncertainty behind us. If that happens, the market might wobble for a minute, but it will set us up to rally in the fall.

Second, Crypto Will March Ahead

More importantly, crypto will be fine.

Even if Clarity doesn’t pass, the crypto industry will find a way forward. Last week, SEC Chair Paul Atkins made this abundantly clear in an interview with CNBC. The SEC, he said, is “ready, willing, and able to come out with rules that address the same issues [as] Clarity.”

There is a trade-off here. In the short term, rules from Atkins’ SEC are likely to be more crypto- and innovation-friendly than those that would emerge from a bipartisan bill in Congress; they may even be an accelerant. The risk is that a future administration appoints a less friendly SEC chair who reverses them.

That said, I don’t think any future SEC chair will be able to do much to reverse crypto’s progress. The industry is pressing forward, and finance is moving onchain. BlackRock’s most profitable ETF is a bitcoin ETF. Giants like Nasdaq and JPMorgan are moving aggressively to tokenize assets. Visa, Mastercard, and Stripe are teaming up with Coinbase to launch a stablecoin platform. Robinhood just launched its own blockchain, which integrates with DeFi apps like Uniswap and Morpho. 

Meanwhile, crypto is joining the federal banking system: The OCC has granted trust charters to Circle, Ripple, Paxos, and a growing list of firms. And governments around the world—from the EU to Japan to Russia—are racing to install pro-crypto legislation.

The Genie Won’t Go Back in the Bottle

In a world where Clarity fails and the SEC lays out rules instead, crypto will have at least two and a half years—until a new administration could potentially install a new SEC chair—to make continued progress. At that point, no SEC chair will be able to put the genie back in the bottle.

The reality is that Washington is always late to major technology shifts, and it has rarely mattered as much as people feared. In 1994, the House passed sweeping telecom reform by a vote of 423-4, only to watch the effort die in the Senate without a floor vote. (Sound familiar?) But the internet didn’t wait around. Over the next two years, Netscape launched and went public, Amazon and eBay opened for business, and the number of websites grew exponentially. Congress eventually caught up, passing the Telecommunications Act of 1996 by a 91-5 margin in the same chamber that couldn’t act two years earlier, and that bill was crucial to the decades of growth that followed. In retrospect, it’s not clear that the two-year delay slowed anything.

Washington is dysfunctional. It seems crazy to me that we can’t get our act together to pass legislation that would improve investor protections and spark new innovation. But it’s not a referendum on crypto’s validity as a pillar of the global financial infrastructure. That ship has long since sailed. At this point, crypto has enough momentum that it will reshape finance for decades, regardless of what happens in the next few days.

Risks and Important Information

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