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first_img Galaxy: The probability of the CLARITY Act passing has dropped to 10%, SEC and CFTC accelerate independent actions

Galaxy Research analyst Alex Thorn pointed out that as the likelihood of the CLARITY Act passing in 2026 significantly decreases, the U.S. SEC and CFTC are intensifying independent cryptocurrency regulatory actions. The bill previously gained bipartisan support in the Senate Banking Committee but has stalled due to unresolved ethical rules for officials regarding cryptocurrency, pressure from community banks leading to some Republican positions softening, and disputes over developer protection clauses. The Senate Majority Leader failed to push for a vote before the August recess, and the September session is only about two to three weeks long, leading Galaxy to lower the probability to 10%.On the SEC side, the originally planned "Reg Crypto" exemption (which provides a new path for primary issuance of crypto assets) and "Innovation Exemption" (which allows tokenized securities to trade in DeFi secondary markets) have been postponed multiple times. It is reported that the agency had retreated due to opposition from the traditional securities industry, but may restart due to the bleak outlook of the bill, with text expected to be released in the coming weeks to months. These measures are likely to be time-limited sandboxes that will face litigation and require years to refine. The CFTC is actively advocating for jurisdiction over prediction market contracts, responding to the New York Attorney General's attempt to issue an emergency order to ban Kalshi event contracts nationwide, continuing the tug-of-war over federal and state jurisdiction regarding prediction markets.Thorn believes that while the bill covers a comprehensive framework including registration licensing, compliance monitoring, and consumer protection, it is currently more dominated by political factors. SEC Commissioner Hester Peirce's planned departure in November also adds urgency to the advancement of the rules. The related actions aim to fill the legislative vacuum but may ultimately undergo a lengthy judicial and rule-making process.
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