The chances of the CLARITY Act becoming law this year fell sharply on Polymarket on Monday as key Senate Democrats remained unconvinced by Republicans’ latest crypto market structure proposal.
The prediction market had briefly pushed the odds as high as 35% after Republicans introduced a revised proposal with expanded ethics provisions. However, confidence quickly faded as criticism of the new text grew.
By Monday, the implied probability of the CLARITY Act passing had fallen as low as 16%.
Democrats Push Back on CLARITY Act Proposal
Several Democratic senators involved in negotiations argued that the latest Republican concessions did not go far enough.
Senator Mark Warner reportedly said the revised ethics provisions remained insufficient. Democratic negotiators also began preparing their own counterproposal.
Republicans need 60 votes in the Senate to advance the legislation.
Failure to secure enough support could delay a bill designed to establish clearer boundaries between the Securities and Exchange Commission and the Commodity Futures Trading Commission when regulating the U.S. crypto market.
Ethics Concerns Remain a Major Obstacle
Ethics provisions have become one of the biggest sticking points in negotiations.
Senator Raphael Warnock reportedly argued that lawmakers should not support legislation that fails to properly address potential conflicts of interest and corruption risks.
Senator Ruben Gallego also expressed dissatisfaction with the Republican proposal and indicated that Democrats would work on an alternative.
Meanwhile, staff connected to Senator Elizabeth Warren reportedly raised concerns about the proposed enforcement powers available to state attorneys general.
Their argument focused on whether White House ethics officials could potentially override certain state-level enforcement decisions.
Democratic negotiators have since submitted their counterproposal to Republicans, according to reports citing people familiar with the discussions.
Some Democrats Still Support Advancing the Bill
Democratic opposition is not universal.
Senator Kirsten Gillibrand has reportedly encouraged colleagues to support the procedural vote needed to move the legislation closer to floor consideration.
On the Republican side, Senator Cynthia Lummis argued that President Donald Trump had already accepted major ethics concessions.
She suggested Republicans had reached the limit of what they were prepared to offer in negotiations.
The dispute adds to existing opposition from a coalition of 18 state attorneys general and increases uncertainty over whether Republicans can gather enough votes.
Banking Groups Raise Stablecoin Concerns
The revised CLARITY Act is also facing criticism from banking industry groups.
Eight banking trade associations argued that the latest proposal still contains loopholes allowing stablecoin rewards that resemble interest paid on traditional bank deposits.
The groups also criticized a proposed regulatory safeguard designed to respond to deposit outflows.
According to the banking organizations, the mechanism would only take effect after significant deposits had already moved away from community banks.
That has raised concerns about how stablecoins could affect traditional banking deposits if reward-based products become more widely used.
Tribal Gaming Groups Oppose Prediction Market Rules
Tribal gaming interests have also raised objections to the latest version of the legislation.
The Indian Gaming Association urged tribal representatives to pressure senators to vote against the bill.
The organization argued that proposed changes involving decentralized finance did not adequately address concerns surrounding prediction markets and tribal gaming rights.
It called for clearer language confirming that federal commodities law would not override tribal or state gaming regulations, including protections under the Indian Gaming Regulatory Act.
Crypto Industry Pushes for CLARITY Act Approval
Despite growing opposition, major crypto industry groups continue to support the legislation.
Blockchain Association CEO Summer Mersinger said the industry had already made substantial compromises in an effort to secure bipartisan backing.
She urged senators to move the CLARITY Act forward.
Supporters argue that the legislation could provide clearer crypto regulations, improve consumer protections, and strengthen rules aimed at preventing illicit financial activity.
They also warn that continued regulatory uncertainty could encourage crypto companies, developers, and investment to move outside the United States.
CLARITY Act Faces Critical Senate Test
The next Senate vote could prove decisive for the future of the CLARITY Act.
Republicans must secure enough Democratic support to reach the 60-vote threshold required to advance the bill.
With lawmakers still divided over ethics provisions, stablecoin rewards, prediction markets, and enforcement authority, the path toward passage remains uncertain.
The sharp decline in Polymarket odds reflects growing market skepticism that lawmakers will reach a compromise quickly.
