Bernstein: Clarity Act Failure Could Send Crypto Lower Again
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Bernstein said in a Monday note that prospects for the Clarity Act passing in 2026 have deteriorated as the Senate runs out of time before recess, calling it the most consequential crypto market structure bill in U.S. history.
- Bernstein expects the SEC and CFTC to accelerate rulemaking on token classifications, DeFi guidance, self-custody rules, and innovation exemptions under Trump's Project Crypto initiative even without legislation, arguing any selloff would likely be temporary.
- Coinbase (COIN) would continue offering yield on idle stablecoin balances while Circle (CRCL) would remain unable to do so directly as an issuer if the bill fails, though Circle could keep sharing distribution economics with partners.
- Bernstein identified recovery in USDC supply growth as the key catalyst for renewed momentum in both Coinbase and Circle stocks.
- JPMorgan warned last week that fading Clarity Act odds are a setback for crypto and could undermine one of the industry's biggest regulatory catalysts.
- Bernstein projected the current crypto downturn ending in late third or early fourth quarter, bolstered by White House policy support and the industry's political influence ahead of U.S. midterm elections.
Why it matters: If the Clarity Act stalls, Bernstein's base case keeps the regulatory status quo in place: Coinbase keeps its yield product, Circle remains structurally disadvantaged, and banks hesitate on blockchain infrastructure until a permanent framework arrives. Bernstein tempers the bearish read by betting the SEC and CFTC will move unilaterally on rulemaking, potentially giving the market a late-Q3 or early-Q4 floor even without legislation.
