CLARITY Act Stalls: Trump Advisor’s Inevitable Crypto Bill Warning as Odds Plunge to 40%
WASHINGTON, D.C. — January 21, 2026 — The path to comprehensive U.S. cryptocurrency regulation hit a significant roadblock this week, casting uncertainty over the landmark CLARITY Act. Consequently, a key advisor to former President Donald Trump issued a stark warning, declaring federal crypto legislation “inevitable” while criticizing industry holdouts. Meanwhile, prediction markets now assign only a 40% chance the bill becomes law this year, down from 50% just days prior.
CLARITY Act Negotiations Stall Amid Key Disagreements
Last week’s failure to advance the Crypto-Asset Linked Accountability and Institutional Transparency Year (CLARITY) Act through a Senate committee markup sent shockwaves through the digital asset industry. The bill, designed to establish a foundational market structure for cryptocurrencies, faltered on several contentious provisions. Patrick Witt, Executive Director of the President’s Council of Advisors for Digital Assets, addressed the impasse directly. He emphasized the need for compromise to secure the 60 votes required in the Senate. “Let’s not let perfect be the enemy of the good,” Witt stated, urging stakeholders to continue refining the legislation.
The primary disagreements center on three critical areas:
- Stablecoin Yield: A proposed ban on offering yield for stablecoin holders, opposed by many as limiting innovation.
- Tokenized Securities: Regulations governing the treatment of tokenized stocks and similar real-world assets.
- DeFi Regulation: The scope of oversight for decentralized finance protocols, a complex and novel challenge.
These issues have created a clear rift within the crypto industry itself, complicating the path to consensus.
Industry Split: Coinbase’s Stance Draws White House Ire
The debate has exposed a fundamental strategic divide among crypto leaders. On one side, executives like Ripple’s Brad Garlinghouse and Securitize’s Carlos Domingo have expressed support for the Senate’s current draft, viewing it as a necessary step toward regulatory certainty. Conversely, Coinbase CEO Brian Armstrong has adopted a “no bill is better than a bad bill” position. He specifically criticized the proposed restrictions on stablecoin yield and DeFi.
Patrick Witt characterized Armstrong’s stance as a “privilege” afforded by the current pro-crypto administration. He issued a pointed warning to the industry. Witt suggested that failing to pass the CLARITY Act could invite more “punitive” legislation from political opponents in the future. This tension highlights the high-stakes calculus between accepting an imperfect framework now or gambling on an uncertain political future.
Expert Analysis: The Stablecoin Yield Sticking Point
Galaxy Digital CEO Mike Novogratz identified the stablecoin yield issue as potentially fatal to the bill’s prospects. He attributed the resistance to traditional banks and their supportive lawmakers, framing it as “politics over good policy.” Novogratz argued the real loser would be the U.S. consumer, denied potential benefits from financial innovation. This analysis underscores how legacy financial interests remain a powerful force in shaping crypto policy, often creating unexpected alliances and opposition.
The following table summarizes the key opposing views on the CLARITY Act’s major pain points:
| Provision | Supportive View (e.g., Ripple, Securitize) | Opposing View (e.g., Coinbase) |
|---|---|---|
| Stablecoin Yield Ban | Prevents systemic risk; aligns with traditional money market rules. | Stifles innovation and consumer yield opportunities; puts US at a competitive disadvantage. |
| Tokenized Asset Rules | Provides clear pathway for security token offerings (STOs) and legitimacy. | May be overly restrictive for novel asset types and trading mechanisms. |
| DeFi Regulation | Necessary for consumer protection and anti-money laundering (AML) compliance. | Extremely difficult to enforce; could push development offshore or kill nascent protocols. |
Market Expectations Decline as Timeline Remains Unclear
Following the stalled markup, the immediate legislative calendar for the CLARITY Act became opaque. No new Senate committee schedule has been announced publicly. While some, like former SEC Chairman Paul Atkins, maintain an optimistic outlook for eventual passage, market sentiment has demonstrably soured. Prediction market platform Polymarket serves as a quantitative barometer for this shift. The platform’s contract on the bill’s passage saw its probability drop from 50% to 40% within days, reflecting growing skepticism among informed traders.
This decline indicates a recognition of the significant hurdles remaining. Achieving consensus among bipartisan lawmakers, disparate industry factions, and banking interests now appears more daunting. The window for action in early 2026 is narrowing, with attention potentially shifting to the upcoming election cycle later in the year. Observers now question whether stakeholders can bridge their differences before the end of the first quarter.
Conclusion
The fate of the CLARITY Act hangs in a delicate balance, emblematic of the broader struggle to regulate a fast-evolving technological frontier. The declaration from Trump’s advisor that a crypto bill is inevitable underscores a bipartisan recognition that federal action is required. However, the plunge in market expectations to 40% reveals deep skepticism about the current bill’s path. The coming weeks will be critical. Industry leaders, policymakers, and regulators must navigate a complex web of technical details and political pressures. Their success or failure will set the foundational tone for the United States’ role in the global digital asset economy for years to come.
FAQs
Q1: What is the CLARITY Act?
The Crypto-Asset Linked Accountability and Institutional Transparency Year (CLARITY) Act is a proposed U.S. Senate bill aimed at creating a comprehensive regulatory framework for cryptocurrency markets, covering exchanges, stablecoins, and decentralized finance.
Q2: Why did the CLARITY Act stall in the Senate?
The bill stalled during a committee markup due to disagreements on key provisions, primarily a ban on stablecoin yield, rules for tokenized securities, and the regulatory approach to DeFi protocols.
Q3: What did Trump’s advisor say about the crypto bill?
Patrick Witt, Executive Director of the President’s Council of Advisors for Digital Assets, stated that a federal crypto market structure bill is “a question of when, not if.” He criticized Coinbase’s opposition as a “privilege” and warned of potentially worse legislation if this opportunity is missed.
Q4: What are the current odds of the CLARITY Act passing in 2026?
As of January 21, 2026, prediction market Polymarket places the odds of the CLARITY Act becoming law this year at approximately 40%, down from 50% the previous week.
Q5: What is the main industry disagreement regarding the bill?
The industry is split between leaders like Ripple who support the current draft to achieve regulatory clarity and leaders like Coinbase’s Brian Armstrong who believe its restrictions on yield and DeFi are so detrimental that no bill would be preferable.
