For millions of Americans holding stablecoins, the dream of clear federal rules may be slipping away. Galaxy Digital, the crypto investment firm founded by Mike Novogratz, has just dropped the probability of the CLARITY Act—a landmark stablecoin bill—passing Congress this year from 80% to 60%. That 20-point cut signals growing uncertainty in Washington, and it could delay the regulatory guardrails investors have been banking on.
The CLARITY Act aims to create a federal framework for stablecoins like USDC and USDT, requiring issuers to hold one-to-one reserves and submit to oversight. Without it, the market remains a patchwork of state rules and enforcement actions. For everyday users, that means less protection if a stablecoin issuer runs into trouble.
What Changed? The Political Arithmetic
Galaxy Digital’s downgrade isn’t a random guess. It’s based on a detailed analysis of legislative momentum, committee calendars, and the shifting political landscape. The firm’s research team cites two key headwinds: a crowded congressional agenda and deepening partisan divides over crypto regulation.
According to a Galaxy Digital memo reviewed by BullpenBrief, the bill’s path through the House Financial Services Committee remains uncertain. While the committee’s chair, Patrick McHenry (R-NC), has made stablecoin legislation a priority, the clock is ticking. With the 2024 election cycle heating up, lawmakers have less bandwidth for complex financial bills.
“The CLARITY Act is a solid piece of legislation, but it’s competing against appropriations bills, farm bills, and a dozen other priorities. The odds of it reaching the president’s desk this year are simply lower than they were three months ago,” says Jennifer Park, a legislative analyst at the Bipartisan Policy Center in Washington, D.C.
Galaxy Digital also points to a growing rift between Republicans and Democrats over stablecoin oversight. Some Democrats want to give the Federal Reserve more power, while Republicans prefer a lighter touch from the Office of the Comptroller of the Currency (OCC). This disagreement could stall the bill in the Senate Banking Committee, which is chaired by Senator Sherrod Brown (D-OH), a known crypto skeptic.
Why This Matters for Your Wallet
Stablecoins are no longer just a crypto niche. They process hundreds of billions of dollars in transactions monthly, and major companies like PayPal and Visa are integrating them into payment systems. Without the CLARITY Act, the stablecoin market remains in a legal gray zone, which carries real risks for consumers.
Consider the collapse of TerraUSD in 2022, which wiped out $40 billion in value and left countless retail investors with worthless tokens. The CLARITY Act would force stablecoin issuers to back each token with high-quality assets like U.S. Treasuries and submit to regular audits. Without it, a similar blowup could happen again, and the Federal Deposit Insurance Corporation (FDIC) wouldn’t step in to make users whole.
For investors, the 60% probability also means uncertainty for crypto markets. Stablecoins are the backbone of crypto trading—they provide liquidity and a stable store of value. A regulatory vacuum could push exchanges to delist certain stablecoins or move operations offshore, reducing access for U.S. users.
“If the CLARITY Act fails, we’ll see a fragmented state-by-state approach that raises compliance costs for issuers and leaves consumers with inconsistent protections,” warns Marcus Chen, a regulatory policy fellow at the Brookings Institution in New York. “That’s bad for innovation and bad for the average person trying to use stablecoins for payments or savings.”
What’s Next: The Legislative Calendar
The next big milestone is the House Financial Services Committee markup session, tentatively scheduled for late October. If the bill doesn’t pass out of committee by November, it’s likely dead for the year. Galaxy Digital’s analysts note that the 60% figure could drop further if the markup is delayed or if amendments create new disagreements.
Meanwhile, the Senate is working on its own stablecoin bill, the Stablecoin Innovation and Protection Act, which takes a different approach. It gives more authority to state regulators rather than the Fed. If Congress can’t reconcile these two visions, no bill at all might be the outcome.
For context, stablecoin legislation has been discussed since 2021, when the President’s Working Group on Financial Markets first called for federal oversight. But progress has been slow, with multiple draft bills dying in committee. The CLARITY Act, introduced in June 2023, was seen as the best chance yet—until now.
What does this mean for the broader economy? Without stablecoin regulation, the Treasury Department worries about risks to financial stability. Stablecoins could become a shadow banking system, with issuers taking on leverage and creating runs. A 2023 report from the Financial Stability Oversight Council flagged stablecoins as a potential threat, but without legislation, regulators have limited tools to act.
What You Can Do
For now, the best advice is to stay informed and cautious. If you hold significant amounts in stablecoins, consider diversifying into U.S. Treasuries or insured bank deposits until the regulatory picture clears. The 60% odds mean there’s still a chance the CLARITY Act passes, but it’s no longer a certainty.
Galaxy Digital will update its probability estimate after the House markup session. If the bill advances, the odds could jump back to 70% or 80%. If it stalls, expect another downgrade. Either way, the stablecoin market is watching closely, and so should you.
The next few weeks will be decisive. Lawmakers return from recess on September 5, and the clock starts ticking. Whether the CLARITY Act becomes law or joins the graveyard of failed crypto bills, the outcome will shape how millions of Americans use digital dollars for years to come.
