CLARITY Act faces Senate deadline: Can it pass before recess?

As the digital asset industry enters 2026, the usual “new year, new market” optimism has given way to a high‑stakes countdown in Washington.

Attention is now firmly set on the 15th of January, the expected launch date of the CLARITY Act.

For context, this act is landmark legislation designed to end the long‑standing era of “regulation by enforcement” that has burdened U.S. crypto firms for years.

However, getting the bill passed is becoming increasingly difficult.

Senators will discuss the CALRITY Act

According to Punchbowl News, the Senate Banking Committee is entering a ‘make-or-break’ phase, with a critical bipartisan meeting scheduled for 6th January.

This isn’t just another routine briefing. Lawmakers are making a final push to align the Senate’s version of the market structure bill before time runs out.

Interestingly, the timing is extremely tight. With the Martin Luther King Jr. Day recess approaching, time is running short for lawmakers. They now have less than two weeks to resolve ongoing disputes over DeFi regulation.

In addition, lawmakers must also decide how to divide authority between the SEC and the CFTC.

Remarking on this urgency, Punchbowl News’ finance reporter Brendan Pedersen said,

“January is crunch time for the Senate Banking Committee on this effort to retool the shape of the financial system.”

Roadblocks ahead…

The months-long dead end that blocked progress in late 2025 has broken down the usual bipartisan cooperation. Efforts to integrate digital assets into the U.S. financial system remain stalled.

The main obstacle is disagreement among lawmakers over DeFi oversight and the SEC’s authority. This tension has now reached a critical point under the leadership of Committee Chair Tim Scott.

According to Pedersen, Scott’s meeting on the 6th of January followed a December warning that time to reach a deal was running out.

Scott has signaled that if the deadlock continues into 2026, he will shift strategies.

He is prepared to abandon the bipartisan approach and push the bill toward markup without Democratic support.

What’s next if the CLARITY Act gets approved?

This coincided with Bitcoin [BTC] leading the $3.21 trillion market, while the CLARITY Act emerged as a key catalyst for major liquidity shifts.

Throughout Q4 of 2025, a muted risk appetite kept the CoinMarketCap Altcoin Season Index suppressed at a dismal 22/100.

Notably, capital inflows moved almost entirely into the relative safety of BTC and Ethereum [ETH] ETFs.

Meanwhile, analysts at Bull Theory note that with the ALT/BTC pair at multi‑year oversold levels, the tide appears ready to turn.

Therefore, as Bitcoin steadily grinds toward the historic $95,000 mark, momentum in the market continues to build.

And the passage of the CLARITY Act would give institutional investors the legal green light they need to diversify beyond the major assets.

What do the prediction markets say?

Meanwhile, on the first day of the new year, prediction platform Kalshi reported a surge in confidence.

At press time, traders were pricing in a 69% chance that the CLARITY Act will be signed into law before May.

Additionally, on Polymarket, traders pushed the odds from a bleak 15% to a stronger 35%, reflecting renewed momentum after year-end updates.

So, if the CLARITY Act survives the next two weeks in the Senate, it could finally end the regulatory winter and open the door to a new wave of institutional growth.

Final Thoughts

• The CLARITY Act’s passage could mark a turning point, unlocking long‑awaited institutional participation in crypto.
• Failure to resolve disputes quickly risks prolonging uncertainty and delaying broader market growth into 2026.