Clarity Act's odds of passing plunge as Republicans reject Democrats' counter-proposal

The Clarity Act's prospects for passing a crucial Senate test dwindled Tuesday as Republicans refused a Democratic counteroffer, leaving the two parties far apart mere hours before a critical procedural vote. Among the bill's key Republican backers, Sen. Cynthia Lummis (R-Wyo.) asserted that the Democratic proposal offered minimal progress from their positions pre-August recess.

"Senate Democrats' counter offer looks identical to their opening position at the start of recess," Lummis declared in a statement. "Republicans have moved substantially on every front, including agreeing to nearly all of the Tillis-Gallego ethics framework, while Democrats have not budged an inch." Should Democrats genuinely aim for a deal, they must transition from reiterating the same demands to earnest negotiation, Lummis added.

The likelihood of the Clarity Act becoming law in 2026 plummeted to 14%, according to Polymarket bettors, down from approximately 30% roughly 24 hours prior. This shift is also evident on Kalshi, where traders are increasingly shifting any breakthrough to a later date. The contract for a crypto market structure bill to become law before October 1, 2027, dropped to 36% on Tuesday, from around 53% on Monday morning.

In contrast, traders on Monday had placed the chances of passage by July 1, 2027, at 53%. By Tuesday, the longer timeline was appearing more plausible: Kalshi traders gave the bill, or a comparable crypto market structure measure, a 51% chance of becoming law by January 1, 2028. This reversal follows a surge in prediction markets on Monday, buoyed by hopes that Republican concessions could finally break the months-long impasse.

However, this optimism quickly evaporated as banking entities pushed lawmakers to tighten regulations on stablecoin interest and rewards, while a bipartisan coalition of state attorneys general cautioned that the legislation could diminish states' authority to combat crypto-related fraud. Republicans delivered their final draft over the weekend after implementing over 100 Democratic-requested changes, including concessions on ethics provisions.

The Senate is set to vote Tuesday afternoon on whether to invoke cloture on the motion to proceed, necessitating a 60-vote majority.