Bernstein sees another leg lower for crypto markets if Clarity Act stalls

Wall Street broker Bernstein has warned that failure to pass the Clarity Act this year could trigger another selloff in crypto markets, but suggested U.S. regulators would accelerate rulemaking to provide greater regulatory certainty. The broker noted that the chances of the legislation passing have decreased as the Senate nears its recess, despite resolving contentious issues such as stablecoin yield rules.

Analysts led by Gautam Chhugani described the Clarity Act as the most consequential crypto market structure bill in U.S. history. If the bill fails to pass, the analysts expect a temporary negative reaction across digital assets, with regulators expanding rulemaking under President Trump's Project Crypto initiative. Passage of the Clarity Act would establish clear rules for digital assets, reduce regulatory uncertainty, and unlock broader institutional adoption, according to Bernstein's analysts.

The broker expects regulators to move more quickly on token classifications, DeFi guidance, self-custody rules, and innovation exemptions while continuing to support tokenization, crypto derivatives, and prediction markets. Even without the legislation, Bernstein sees the crypto industry's political influence remaining strong ahead of the U.S. midterm elections and expects the current downturn to end in late third or early fourth quarter.