Jefferies Flags Crypto Volatility on Clarity Act Delays
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- Jefferies warned the Clarity Act faces major Senate hurdles, with roughly 20 legislative days before the August recess to merge competing versions, clear procedural votes, and reconcile the measure with the House bill.
- Polymarket odds for Clarity Act passage by end of 2026 dropped to 48%, down from 70% in mid-May, as ethics provisions, illicit finance concerns, and limited floor time eroded confidence.
- The Clarity Act passed the Senate Banking Committee in a bipartisan 15-9 vote earlier this year and would assign digital assets to SEC or CFTC oversight, potentially enabling broader institutional tokenization, custody, staking, and crypto ETF offerings beyond bitcoin.
- Jefferies flagged crypto-linked equities Circle (CRCL), Coinbase (COIN), and Bullish (BLSH) as likely to see elevated volatility during the legislative process.
- For Circle, the current bill would reportedly close a loophole allowing third parties like Coinbase to offer rewards on USDC holdings, potentially slowing USDC growth, though Jefferies said Circle's biggest long-term risk is stablecoin competition from banks and fintechs.
- JPMorgan separately warned the U.S. crypto market structure bill may have only a limited passage window this year as the congressional calendar tightens and the stablecoin yield debate remains unresolved.
- Jefferies analysts led by Andrew Moss said failure to pass before the August recess could push the bill to next year or later if Democrats flip the Senate in November.
Why it matters: The Clarity Act is the crypto industry's most important market structure bill, and its stalled timeline—roughly 20 Senate days before August recess with Polymarket passage odds now below 50%—means banks and asset managers face an extended wait for the durable rules needed to launch tokenization, custody, and expanded crypto ETF offerings, while Circle, Coinbase, and Bullish equities absorb legislative-process volatility in the interim.
