The brokerage firm cautions that a failure to pass the Clarity Act this year could lead to a downturn in crypto prices, while anticipating U.S. regulators to expedite rulemaking efforts.
By Will Canny, AI Boost|Edited by Nikhilesh De Aug 3, 2026, 1:49 p.m. 2 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on Bernstein warns of further decline in crypto markets if Clarity Act fails. (Shutterstock)SummaryShow- Bernstein indicated in a report on Monday that a failure to pass the Clarity Act could negatively impact bitcoin and the broader crypto market in the short term.
- The firm anticipates that the SEC and CFTC will hasten their rulemaking efforts under Project Crypto, regardless of the legislative outcome.
- Regulatory clarity is deemed essential for fostering crypto innovation, tokenization, and the involvement of traditional financial institutions.
Bernstein, a prominent Wall Street brokerage, warned that the inability to pass the Clarity Act within the current year could lead to a further decline in the crypto markets. However, they also believe that U.S. regulators will likely increase their efforts to establish clearer rules for the sector.
In a note released on Monday, Bernstein expressed that the chances of the Clarity Act passing have diminished as the Senate approaches its recess, despite some contentious issues, such as stablecoin yield regulations, being addressed.
“Clarity is the most consequential crypto market structure bill in U.S. history, but the chances of its 2026 passing seem to be dwindling,” the analysts, led by Gautam Chhugani, stated in the report.
A setback in the passage of the bill could trigger an immediate negative response in digital asset markets, according to the analysts. However, they believe that any downturn would likely be short-lived as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) expand their rulemaking efforts under the Project Crypto initiative from the Trump administration.
The Clarity Act is seen as crucial for the crypto industry as it aims to provide clear regulations for digital assets, reduce uncertainty, and promote broader adoption by institutional investors. Analysts suggest that its passage would enhance market confidence, enabling banks, asset managers, and exchanges to invest more in blockchain technologies and expand their crypto offerings.
Bernstein’s analysts predict that regulators will accelerate their work on token classifications, guidance for decentralized finance (DeFi), self-custody regulations, and innovation exemptions for token issuance, while also supporting tokenization, crypto derivatives, and prediction markets.
The report stresses the strategic significance of the Clarity Act, as it would offer permanent regulatory clarity, encourage investment in blockchain infrastructure by banks and broker-dealers, clarify the distinction between securities and commodities oversight, and establish a long-term framework for decentralized finance and digital assets, irrespective of political changes in future administrations.
Even if the Act does not pass, Bernstein anticipates that the political influence of the crypto sector will remain strong leading up to the U.S. midterm elections. They project that the current market downturn could end in the late third or early fourth quarter, bolstered by potential support from the White House.
For publicly traded companies, the failure of the Clarity Act would mean continued uncertainty regarding stablecoin regulations. Coinbase (COIN) would still be able to offer yield on idle stablecoin balances, while Circle (CRCL) would be unable to do so directly as an issuer but could continue sharing revenue with partners. The report notes that a resurgence in USDC supply growth is essential for renewed momentum in both companies’ stocks.
Last week, JPMorgan (JPM) cautioned that the declining chances of the Clarity Act's passage in the U.S. Senate this year represent a setback for the crypto sector, warning that further delays could undermine one of the industry's key regulatory opportunities.
Read more: JPMorgan says fading Clarity Act odds weigh on crypto outlook
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