CLARITY Act Odds Crash to 10%, the SEC Cancels Its Big Crypto Vote — and Bitcoin Barely Blinks

It took Washington one week to deliver the crypto industry a hat trick of setbacks — and the market’s response was a shrug. On Friday, Galaxy Research cut its probability of CLARITY Act passage in 2026 to 10%, down from 50% in late June. Hours earlier, the SEC cancelled the open meeting where it was expected to propose Reg Crypto, its first formal rulemaking for digital assets, without offering a new date. Days before that, the CFTC invoked emergency powers it had not used since 1980 to order prediction-market venue Kalshi to keep operating against a $36 billion state lawsuit. Bitcoin, for its part, climbed back above $63,100 on Saturday, and prediction markets quietly repriced the floor higher.

The three stories are one story: the federal regulatory framework the industry was promised in 2025 is wobbling, and nobody in Washington can say when — or whether — it lands.

Galaxy cuts CLARITY odds to 10%: “we need magic”

Alex Thorn, head of firmwide research at Galaxy Digital, published the downgrade on X on Friday. The trajectory of his estimate reads like a campaign death spiral: 75% on May 22, after the Senate Banking Committee’s bipartisan markup; 60% on June 6; 50% on June 26; and now 10% — the lowest figure Galaxy has ever assigned the bill.

The reasons are political, not technical. First, the ethics issue: a bipartisan group of senators sent a package of disclosure rules for government officials’ crypto holdings to the White House on July 30, and the White House never publicly responded. Second, community banks — backed by parts of the Democratic caucus — keep lobbying against stablecoin issuers paying yield, a provision the banking industry treats as an existential competitive threat. Third, “illicit activity” hawks continue to push for weaker developer protections in the companion Blockchain Regulatory Certainty Act, even if late-stage moderation by some law-enforcement groups tempered that risk.

Then there is the calendar, which Galaxy calls the real killer. The Senate returns September 14 and largely adjourns for midterm campaigning around October 2 — a working window of two to three weeks, squeezed by the September 30 end of the fiscal year and its budget fights. For CLARITY to pass, a motion to proceed would need to be filed almost immediately and the bill would have to dominate the entire session. Majority Leader John Thune did “notice” the first vote before recess, meaning the chamber plans to take it up in mid-September — but Thune also declined to schedule a vote before the break after failing to corral 60 votes. “Expecting a vote on the bill when the Senate returns in September would be optimistic if not quixotic,” Thorn wrote. “If it is to pass in 2026, we need magic.”

The prediction market that tracks the bill is slightly less pessimistic: Polymarket’s “CLARITY Act signed into law in 2026?” contract trades around 18% Yes, recovered from the 13.5% record low of August 7, with $7 million in volume. Either way, the market and Galaxy now agree the base case is a lame-duck session — or 2027.

The SEC cancels its first real crypto rulemaking vote

The oddest twist came from the agency that was supposed to fill the legislative vacuum. The SEC had scheduled an open meeting for Friday, August 14 to consider proposing Reg Crypto: a roughly 400-page rule creating a tailored offering regime for investment contracts involving crypto assets — the first time the commission has attempted formal rulemaking for digital assets instead of regulating through enforcement.

According to reporting by crypto.news, the draft contains three pathways: a startup exemption allowing scaled disclosure for up to four years; a fundraising exemption permitting raises of up to $75 million in any 12-month period with audited financials and semiannual reporting; and an investment-contract safe harbor that would let tokens exit securities classification once their networks reach sufficient decentralization. TD Cowen’s Jaret Seiberg called it “a pivotal rulemaking” that would “eliminate the binary token-is-always-a-security analysis.”

None of it happened. A Sunshine Act notice signed by SEC Secretary Vanessa Countryman cancelled the meeting less than a day before it was due to begin, with no replacement date. “Due to an unforeseen scheduling issue, tomorrow’s Open Meeting will be moved to a later date,” an agency spokesperson said. Eleanor Terrett reported that a source familiar with the matter blamed concern that the framework could “negatively impact negotiations on the tokenization section of the Clarity Act” — a striking inversion, given the SEC was expected to fill the gap precisely because the bill was stalling. The separate “Innovation Exemption” for secondary trading of tokenized securities in DeFi was delayed again, after Wall Street and White House concerns surfaced earlier in the week, per CoinDesk.

Galaxy’s read: the SEC likely held back Reg Crypto for months to avoid interfering with CLARITY politics, and its spasmodic rollout now reflects the pull between a commission eager to act while Chair Paul Atkins and Commissioner Hester Peirce (who must vacate her seat by November) are still in office, and a traditional securities industry pushing back. Galaxy expects the texts of Reg Crypto and the Innovation Exemption to be published “over the next several weeks or couple months” — with or without Congress.

The CFTC just used powers dormant since 1980

The third front is the quietest and potentially the most consequential. On August 11, CFTC Chairman Mike Selig invoked Section 8a(9) of the Commodity Exchange Act — emergency authority the agency has used only seven times in its history, and not since 1980 — to order Kalshi to keep operating nationwide after New York Attorney General Letitia James filed a $36 billion civil enforcement action alleging the prediction-market platform runs an unlicensed gambling operation. The CFTC called the threat of a sudden shutdown an “existential threat” to its registrants and jurisdiction.

New York’s suit alleges Kalshi violated the state constitution, the Federal Interstate Wire Act and state gaming law, including by letting 18-year-olds trade sports contracts in a state whose mobile sports-betting age is 21. A coalition of 44 state attorneys general, led by Ohio’s Andy Wilson, has urged the CFTC to withdraw its proposed prediction-market rule, arguing sports event contracts are state-regulated gambling, not federal derivatives.

The stakes go far beyond Kalshi. If the CFTC’s preemption argument survives judicial review, any federally licensed venue — including crypto perpetuals and tokenized derivatives platforms — could argue state enforcement no longer applies to it. If it fails, state attorneys general gain a template to go after the entire event-contract and prediction-market industry, from Kalshi to Polymarket.

Bitcoin’s answer: a shrug and a firmer floor

None of this moved the tape much. Bitcoin traded near $63,100 on Saturday, up roughly 0.4% on the day and fully recovered from Thursday’s intraday low near $62,667, when a two-day ETF outflow streak and a whale’s $125 million short dragged it to the bottom of its two-month range. Ether sits near $1,884, XRP at $1.01, solana near $75.60.

The prediction-market tape, our usual tell, shows the floor hardening while the ceiling stays capped: the odds of bitcoin holding $62,000 on August 17 jumped 10 points in 24 hours to 90.5%, with August 18 at 84.5% (+9.5 points); the probability of holding $60,000 through August 20 is 95.5%; and the $54,000–$58,000 thresholds through the weekend are at effectively 100%. In plain English: traders are pricing out the downside week by week, while the breakout above $64,000 remains a minority bet. The market has spent two months learning that Washington’s regulatory calendar and bitcoin’s price are two different clocks — and it is betting the floor, not the headlines.

What to watch

Three dates decide the next act: September 14, when the Senate returns and Thune’s noticed vote on CLARITY finally gets a calendar; the SEC’s rescheduled Reg Crypto meeting, whenever it lands; and the FOMC minutes due next week, the first hard read on a Fed that has turned dovish just as the fiscal year-end chaos begins. For US holders, the honest summary is this: the legislative path is closing, the agencies are scrambling, and bitcoin is treating it all as noise. That divergence is the story — until one of the three fronts actually resolves.

Data: Galaxy Research Weekly Research Brief (Aug 14), Unchained, CoinDesk, crypto.news, Polymarket (gamma-api + clob), CoinGecko. Indicative data only — this article is informational and does not constitute investment advice.