Galaxy Research has just delivered a cold shower to the American crypto community. The research firm founded by Mike Novogratz has drastically cut the probability of the CLARITY Act passing before the end of the current legislative year to just 10%.

Behind that blunt figure lie several structural roadblocks that lawmakers are struggling to overcome. Between unresolved ethical questions, disagreements over stablecoin yields, and a Senate window that is rapidly closing, the flagship piece of US crypto regulation is in serious trouble.

Here is a breakdown of a legislative setback that could redefine the regulatory timeline for the entire sector.

Why Galaxy Is Sounding the Alarm on the CLARITY Act

The CLARITY Act is one of the most anticipated legislative proposals in the US crypto industry. The bill aims to establish a clear framework for distinguishing which digital assets fall under the jurisdiction of the Securities and Exchange Commission (SEC) and which fall under the Commodity Futures Trading Commission (CFTC) — a monumental issue for thousands of blockchain projects operating in a legal grey zone.

But according to Galaxy Research‘s analysis, three major obstacles are currently blocking any meaningful progress. First: unresolved ethical questions surrounding insider treatment and the disclosure of sensitive information. Second: a persistent disagreement over whether stablecoins should be permitted to generate yield — a flashpoint between DeFi innovators and traditional regulators. Third: the legal protection of decentralized protocol developers, whose regulatory status remains deeply unclear.

These friction points are not new, but their accumulation without any credible near-term resolution has pushed Galaxy to sharply revise its projections. The firm notes that the bipartisan consensus required to pass such a bill remains extremely fragile.

The September Senate Window: Too Narrow for Such a Complex Bill

Beyond the substantive disagreements, Galaxy is also flagging a particularly constraining scheduling problem. When the US Senate returns from recess in September, the available legislative window will be extremely tight. Senators will be juggling competing budgetary and political priorities, leaving little room for a bill as technically complex and contentious as the CLARITY Act.

In this context, even a last-minute agreement between Republicans and Democrats on the outstanding sticking points would likely not be enough to guarantee a vote before the session ends. Galaxy now considers a delay to 2026 the most probable outcome — which would place the bill squarely within an even more unpredictable electoral cycle.

For the crypto industry, this setback is far from trivial. The absence of a clear regulatory framework continues to hold back institutional investment and maintains a heavy legal uncertainty for exchanges, token issuers, and DeFi protocols operating out of the United States. Market participants will therefore have to navigate the regulatory status quo for several more months — a reality that is feeding caution across market sentiment.