When does the probability of a bill passing reveal more about market expectations than the bill itself? On prediction markets, bets on the CLARITY Act have dropped from a February peak of 82% to just 54%—even after the Senate Banking Committee advanced the bill by a 15-9 vote. This gap reflects more than just legislative wrangling; it’s the cumulative result of internal industry rifts, deadlocked ethics provisions, and mounting legislative calendar pressures. As some analysts have noted, a slide from 82% to 54% in a single year is a dramatic shift, underscoring just how pessimistic traders have become about the bill’s prospects. Historically, when prediction market odds fall below 60%, it signals genuine uncertainty.
As of May 25, 2026, industry divisions triggered by a compromise on stablecoin yield provisions have sent the relevant Polymarket contract down 11% in 24 hours, with the probability now at 54% and $430,600 in daily trading volume. The contract’s total wagered amount has reached $37.8 million. The probability curve suggests traders are growing more measured in their outlook—the bill isn’t dead, but the path to enactment is narrowing.
The Probability Curve: Six Pivotal Shifts from 82% to 54%
The CLARITY Act’s prediction market odds have swung wildly over the past five months, with each inflection point tied to a major legislative event.
In January 2026, the Senate Banking Committee was scheduled to mark up the bill on January 15. The night before, Coinbase CEO Brian Armstrong publicly withdrew support for the draft on X, citing major concerns over stablecoin yield, tokenized equities, DeFi provisions, and SEC/CFTC jurisdiction. The committee promptly postponed the markup, sending prediction odds tumbling.
By February, as bipartisan negotiations progressed, market sentiment turned bullish. Odds of passage within the year soared to a high of 82%.
In March, the banking industry rejected a White House-brokered compromise, plunging negotiations into a fresh stalemate and sending probabilities sharply lower. On March 17, Citigroup cut its 12-month Bitcoin price target from $143,000 to $112,000, citing legislative gridlock over the CLARITY Act—the first major Wall Street bank to publicly downgrade crypto asset valuations due to regulatory uncertainty.
Around the same time, Coinbase privately told Senate staffers it could not accept the March 23 draft, and clashed with other industry players on a sector call. Some firms argued that giving up certain stablecoin reward provisions would be too costly; others warned that losing the bill’s overall framework posed greater risks. In March, Circle’s share price plunged 20% in a single day after the initial draft threatened to ban all stablecoin rewards.
By mid-April, prediction odds had slipped into the low 40s, marking the year’s lowest point for market sentiment.
A turning point came in early May. Senators Thom Tillis and Angela Alsobrooks released a compromise on stablecoin yield provisions, allowing crypto firms to reward users for active engagement but banning passive interest on idle holdings. Coinbase Chief Policy Officer Faryar Shirzad publicly praised the deal, noting that while banks secured tighter restrictions, the crypto industry preserved the ability to reward users for genuine activity. Armstrong posted a brief "Mark it up" message, reversing his earlier opposition.
This breakthrough quickly moved prediction markets: odds surged from 46% at the start of May to 65% by May 6, peaking at 73% on May 11—the highest in two months.
On May 14, the Senate Banking Committee approved a revised bill by a 15-9 vote, with all 13 Republican members and two Democrats crossing party lines in support. Yet markets didn’t sustain the rally. After briefly topping 70%, odds began a steady decline. Data from Kalshi showed the probability of passage before 2027 dropped from nearly 75% last week to 49% now, with just a 14% chance before July and 37% before August.
As of May 25, Polymarket odds had fallen back to 54%. The $37.8 million in total wagers underscores that this pricing reflects the judgment of a broad base of real-money traders.
Three Layers of Resistance: Why Committee Success Didn’t Lift the Odds
Prediction market probabilities aren’t random; they’re a continuous pricing of all known information. To understand the logic behind the 54% figure, we need to answer a key question: Why did a 15-9 committee vote not push odds back above 80%, and instead trigger a continued decline?
First Resistance: Stablecoin Yield Provisions Divide the Industry
The Tillis-Alsobrooks compromise in early May was seen as a breakthrough, with public support from both Coinbase CEO Armstrong and CPO Shirzad. But this didn’t erase all industry tensions.
The March sector call, where Coinbase clashed with other firms, showed that even after a compromise, deep differences remain over stablecoin reward provisions. Some companies still argue that giving up certain reward clauses is too high a price. Coinbase’s shift from "better no bill than a bad bill" in January to "Mark it up" in May helped move things forward, but also highlights persistent fault lines over core interests within crypto.
The banking industry hasn’t let up either. According to CoinDesk, the American Bankers Association (ABA) ramped up lobbying ahead of the vote, warning that the revised language could still undermine bank deposits and financial stability. On May 10, ABA CEO Rob Nichols urged bank executives to launch an emergency lobbying push to amend the bill before markup. American Banker noted that banks already secured their main demand in the compromise—a ban on passive yield, essentially a win for banks—but some trade groups continue to push for tighter restrictions on active rewards.
An April analysis from the White House Council of Economic Advisers (CEA) provided data to contextualize this dispute: a total ban on stablecoin yields would boost bank lending by just $2.1 billion, a mere 0.02% increase, with community banks seeing only a $500 million, or 0.026%, uptick—far less than the large-scale deposit outflows banks have warned about.
Second Resistance: Ethics Provisions as a Prerequisite for Democratic Support
A Senate floor vote requires 60 votes to overcome procedural hurdles. With Republicans holding 53 seats, at least seven Democrats must cross the aisle. Only two Democrats backed the bill in committee, and one—Alsobrooks—has stated her committee vote doesn’t guarantee support on the floor. Even those two Democratic committee votes came with caveats, leaving a significant gap to the seven needed.
The main obstacle for Democratic support is the ethics provision. The most politically charged amendment, introduced by Senator Chris Van Hollen, would ban the president, vice president, members of Congress, senior officials, and their families from owning, promoting, or being affiliated with digital asset issuers or platforms—directly targeting the Trump family’s ties to the World Liberty Financial project. The amendment was defeated 11-13 along party lines in committee, meaning the current bill makes no concessions on ethics, which is a direct barrier to broader Democratic support. Senator Gallego has warned he may vote against the bill on the floor if the ethics issue isn’t resolved.
Third Resistance: Legislative Calendar and the Midterm Squeeze
Congress entered Memorial Day recess on May 21. The Senate won’t resume normal legislative business until early June, meaning the earliest the bill could reach the floor is mid-to-late June, even if everything proceeds smoothly.
The Senate’s legislative calendar is already packed, with appropriations, housing, and agriculture bills, plus the FISA reauthorization deadline in June. This makes it uncertain whether the bill can reach a floor vote in July or pass before the August recess.
NYDIG has warned that June through early August is the last normal session window. Congress recesses from late July to early September, after which lawmakers shift into midterm campaign mode. Senate leadership is unlikely to schedule a contentious 60-vote bill in that period. Senator Lummis put it bluntly: "This is our last chance to pass this bill before 2030. We can’t gamble with the future of American finance."
Taken together, the 54% probability doesn’t reflect market skepticism about the bill’s content, but rather a balanced pricing of these three constraints: historic industry divisions, the ethics impasse, and legislative calendar pressures.
Sentiment Landscape: Four Forces in a Tug-of-War
Public debate around the CLARITY Act has crystallized into four distinct camps, whose competing interests are driving the ongoing swings in prediction market odds.
Banking Industry: Deposit Security Over Innovation Incentives
Banking lobbyists have stuck to a core argument: allowing stablecoin holders to earn deposit-like yields would trigger massive outflows from the federally insured banking system. Standard Chartered analyst Geoffrey Kendrick warned in January that developed-market banks could lose $500 billion in deposits by the end of 2028, with US regional banks—where net interest income can account for over 60% of total revenue—most at risk. While the Tillis-Alsobrooks compromise delivered banks’ main demand—a ban on passive yield—some trade groups are still lobbying to further restrict active rewards. American Banker argued that if the banking industry’s pressure kills the CLARITY Act or pushes it past the midterms, the alternative will be Treasury rulemaking under the GENIUS Act framework—which lacks statutory authority to limit stablecoin rewards, putting banks in a worse position.
Crypto Industry: From Division to Surface-Level Consensus
Early 2026 saw deep splits in the crypto sector over stablecoin yield provisions. In January, Coinbase CEO Armstrong publicly withdrew support, delaying the committee vote. In March, reports surfaced of strategic disagreements between Coinbase and other firms on an industry call. Circle’s share price also plunged 20% in March after the initial draft threatened to ban all rewards.
After the May compromise, the industry presented a united front. Armstrong publicly backed the bill’s progress, and Shirzad called the compromise "workable." But the fundamental split over whether giving up reward provisions is too high a price hasn’t fully disappeared. The final text could easily reignite this debate.
Some Democratic Lawmakers: Ethics Provisions as Key Bargaining Chip
During committee review, Senator Warren outlined five specific flaws in the bill: weakening investor protections from the 1930s Securities Act, eliminating state-level consumer fraud safeguards, allowing banks to hold high-risk assets, national security loopholes, and no restrictions on Trump family crypto conflicts. A HarrisX poll commissioned by CoinDesk found that most registered voters support similar ethics requirements. These moves show that ethics provisions have shifted from a secondary issue to a central bargaining chip within the Democratic caucus.
Prediction Market Traders: Expressing Probabilities with Real Money
Prediction market price swings are a unique kind of "sentiment signal." There’s a notable gap between Polymarket (about 54%) and Kalshi (now below 50% at 49%). On Kalshi, the odds of passage before July are just 14%, and 37% before August. These granular time windows reflect traders’ differentiated views on the feasibility of various deadlines—overall odds hover near 50%, but the probability is much lower for the summer window.
Industry Impact: How Regulatory Pricing Translates to Market Pricing
The fate of the CLARITY Act will have far-reaching market consequences beyond the legislation itself.
From a capital markets perspective, Citigroup cut its crypto asset price targets in March due to legislative delays, slashing its Bitcoin target from $143,000 to $112,000—a 21.7% drop. Citi’s report included both pessimistic and optimistic valuation scenarios, underscoring that regulatory variables are now central to institutional valuation models—affecting not just direction, but quantifiable outcomes.
From an institutional adoption standpoint, the bill’s core value is in resolving "regulatory jurisdiction uncertainty," a fundamental pain point. Many institutional investors remain on the sidelines due to the lack of a clear compliance path. If the bill passes, firms like Grayscale expect a significant acceleration of institutional inflows. If it stalls, the confidence built under the GENIUS Act framework could cool rapidly.
Globally, the EU’s MiCA framework is now in force, and jurisdictions like Singapore and the UAE have established digital asset market structures. If the US fails to pass the CLARITY Act in 2026, the world’s largest crypto market will continue to operate without unified rules, putting the US at a long-term competitive disadvantage in the global regulatory race.
Conclusion
The $37.8 million staked on prediction markets for this bill reflects more than just traders’ interest in a single piece of legislation—it’s a collective pricing of the future of US crypto regulation. The 54% probability isn’t a precise forecast, but a dynamic equilibrium: it absorbs the momentum from committee progress, but remains heavily weighed down by industry divisions, the ethics impasse, and a shrinking legislative window.
The journey from 82% to 54% illustrates a core truth: every legislative milestone matters, but with the 60-vote threshold in the Senate, the breadth of industry consensus and depth of bipartisan support are the decisive factors. From Coinbase’s January withdrawal to March’s industry call disagreements and May’s surface-level compromise, the evolution of crypto industry positions is itself one of the most critical variables in this legislative battle. The coming weeks will be a key window to see whether this consensus can withstand the ultimate test on the Senate floor.
