Galaxy Research Cuts CLARITY Act 2026 Odds to 10% as SEC, CFTC Step In

TLDR:

• Galaxy Research lowers CLARITY Act 2026 passage odds to just 10% amid Senate gridlock.
• Unresolved ethics rules and bank lobbying stalled bipartisan momentum from May’s committee markup.
• SEC advances Reg Crypto and the Innovation Exemption as legislative prospects continue to fade.
• CFTC moves to assert jurisdiction over prediction markets amid overlapping state and federal lawsuits.

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Galaxy Research now places the odds of CLARITY Act passage in 2026 at just 10 percent. The firm points to stalled Senate negotiations and unresolved ethics disputes as key drivers. 

Regulators at the SEC and CFTC are moving to fill the resulting gaps through administrative action instead.

Senate Gridlock Stalls CLARITY Act Momentum

Galaxy Research notes that the CLARITY Act cleared the Senate Banking Committee in May with bipartisan backing. 

That markup fueled expectations of a floor vote before the August recess began on August 7. Those expectations have since collapsed under mounting political pressure.

The firm identifies unresolved ethics controls as a central obstacle to progress. Lawmakers could not agree on rules governing officials’ crypto involvement despite sustained bipartisan effort. Community bank lobbying also weakened Republican support as the summer wore on.

Galaxy Research points to a separate fight over developer protections as another complicating factor. Illicit finance hawks pushed to narrow protections under the Blockchain Regulatory Certainty Act. Some law enforcement groups later softened that stance, easing fears the issue would sink the bill entirely.

Alex Thorn, Head of Firmwide Research at Galaxy, wrote that “CLARITY is now much more about politics than policy.” Senate Majority Leader John Thune declined to call a vote before recess began. He has since noticed an initial vote for when the Senate reconvenes on September 14.

SEC Exemptions Advance as Legislative Odds Fade

Galaxy Research links the SEC’s renewed activity directly to the CLARITY Act’s declining prospects. The agency has moved toward releasing Reg Crypto, covering primary issuance of cryptoassets to the public. It has also advanced the Innovation Exemption, covering secondary trading of tokenized securities in DeFi.

The firm notes that reports of an imminent release have surfaced and stalled repeatedly since May. Pushback from the traditional securities industry contributed to earlier delays at the Commission. A Thursday notice about the SEC’s Friday open meeting suggested Reg Crypto was again nearing release.

Galaxy Research argues the SEC previously slowed these exemptions to avoid disrupting Senate talks on the CLARITY Act.

With the bill’s momentum diminished, the agency now appears freer to act on its own timeline. Commissioner Hester Peirce’s planned November exit may also be adding urgency internally.

The firm expects the Innovation Exemption to operate as a time-limited sandbox for onchain securities trading. Thorn described CLARITY Act passage this year as requiring nothing short of “magic.” Galaxy Research anticipates the sandbox process will draw substantial litigation from traditional finance stakeholders.

CFTC Jurisdiction Fight Adds to Regulatory Patchwork

Galaxy Research frames the CFTC’s prediction market push as part of the same regulatory scramble. The agency argues these contracts qualify as swaps under the Commodities and Exchange Act. That stance has put it in direct conflict with state-level regulators.

This week, the CFTC issued an emergency order countering New York Attorney General Letitia James. James had sought a nationwide restraining order blocking Kalshi from offering certain event contracts. Her request extended beyond sports betting to elections and broader cultural events.

Galaxy Research situates the order within months of overlapping litigation involving states, platforms, and the agency.

Some disputes concern event contracts broadly, while others target sports-specific offerings. All of them turn on the question of state versus federal regulatory authority.

Thorn added that the industry remains “poised for exciting times and a positive regulatory environment ahead even without CLARITY.” Galaxy Research still expects both agencies to keep outpacing Congress through the rest of 2026.

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Source: https://blockonomi.com/galaxy-research-cuts-clarity-act-2026-odds-to-10-as-sec-cftc-step-in/