Polymarket odds of the Crypto Clarity Act being signed into law in 2026 fell to 35% Thursday after Senate Democrats said they would not support the current version of the bill over unresolved ethics provisions.

Why Are Democrats Walking Away?

Democrats want stronger guardrails on Donald Trump’s crypto dealings and said the Republican version of the ethics language falls short on both conflict-of-interest protections and consumer safeguards, Politico reported Thursday.

Senator Ruben Gallego (D-AZ), a key negotiator on the bill, said the version heading to the White House gives the president too much room to continue what he called his “grift” in crypto.

“At the end of the day, we don’t have strong ethics. I don’t care what the president says. You’re not going to have the Democratic votes,” Gallego said.

A Democratic Senate aide added that Republicans were presenting something to the White House that Democrats had never seen or agreed to.

Senator Cory Booker (D-NJ), who has been working on the CFTC portion of the bill, urged Republicans not to release text before ongoing negotiations wrapped up.

Moreover, Senator Bernie Moreno (R-OH) pushed back directly, calling the bill’s ethics provision “the strongest of any piece of legislation ever passed by any Congress” and said the time for a vote has arrived regardless of where Democrats stand.

What Happens If Democrats Don’t Show Up?

The bill needs 60 votes to advance in the Senate, which means Republican support alone is not enough. 

Without at least some Democratic crossover, the Clarity Act cannot clear the chamber before the August 7 recess deadline.

The House is holding a hearing on the crypto market structure bill Thursday, one of the most closely watched crypto policy events of the year. 

The White House is pushing lawmakers to advance the legislation before recess, but the Senate math does not work without bipartisan support.

XRP (CRYPTO: XRP) attorney John Deaton captured the frustration bluntly on X. “After everything crypto has been through this past decade, the Clarity Act could die over ethics concerns?” Deaton wrote. “You can’t write satire this good.”

Meanwhile, Ripple Chief Legal Officer Stuart Alderoty framed the stakes from the industry side. “A vote against the Clarity Act is a vote to leave the same unregulated conditions in place to be exploited by bad actors,” Alderoty wrote.

What Does This Mean For Crypto Markets?

Regulatory uncertainty has been one of the key overhangs on institutional crypto adoption all year. 

Lawmakers designed the Clarity Act to remove years of uncertainty over whether the SEC or the CFTC regulates digital tokens, giving exchanges, token issuers, and institutional participants clearer rules.

With Polymarket odds dropping to 35% and Democrats signaling they will not vote for the current text, the timeline for that clarity has moved further out, keeping the regulatory risk premium in crypto prices intact heading into the second half of 2026.

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