The approval outlook for the CLARITY Act weakened this week as market odds on Polymarket dropped more than 30% within a single day. The probability of the bill becoming law in 2026 fell from 90% to 55% as new concerns emerged about the pace of negotiations in the Senate. The shift occurred while talks continued around rules for stablecoin rewards, which remain the central point of disagreement between lawmakers, banks, and crypto firms.
The decline drew public attention from analysts and industry participants. Dan Gambardello said that the drop suggested that “they're just playing games,” as traders reacted to the state of discussions in Washington.
Source: Polymarket
The sharp market move reflected unease among those tracking the bill. The CLARITY Act has been viewed as a key effort to define digital asset regulation in the United States, yet progress slowed as the March 1 target approached.
Stablecoin Reward Debate Slows Progress in Senate Discussions
A major source of tension is the dispute over whether stablecoin issuers may offer rewards to customers. Banks have argued that high-yield stablecoin products could redirect billions in deposit spread revenue away from traditional lenders. Reports indicate that these institutions fear an annual loss of about $400 billion if consumers shift to stablecoins offering yields near 4%.
Last week, the White House attempted to narrow the debate. According to Patrick Witt, Executive Director of the President’s Council of Advisors for Digital Assets, the administration proposed a rule stating that stablecoin holders cannot earn yield on idle balances. He presented this idea during a closed-door meeting at ETHDenver.
Witt said the proposal aimed to address concerns raised by banks while still allowing stablecoin rewards tied to activity, such as transactions and network participation. He added that the distance between industry and banking viewpoints “shrunk considerably” after the meeting. This discussion also included enforcement language that would allow federal agencies to impose civil penalties of up to $500,000 per day for violations.
Ethics concerns related to President Donald Trump’s family crypto ventures also surfaced, although Witt said they were not central to the current stage of negotiations.
Industry and Banking Groups Press Lawmakers for Clear Rules
The meeting drew representatives from major firms including Coinbase, Ripple, Andreessen Horowitz, and several banking groups such as the American Bankers Association and the Bank Policy Institute. Coinbase Chief Legal Officer Paul Grewal said that discussions remained constructive, though differences persisted.
Polymarket odds continued to shift as traders assessed these updates. The approval probability fell to 44% before recovering to around 52%, yet remained far below early-week levels. Market participants viewed this as a sign that the March 1 deadline may pass without a final compromise.
Trade associations such as the Blockchain Association and the Crypto Council for Innovation also engaged in the process. Both groups called for a rulebook that supports innovation while keeping existing financial safeguards intact.
Ripple CEO Brad Garlinghouse, as we reported recently, said he placed the chances of federal action at 90% before April. His remarks contrasted with the declining odds on prediction markets, although they suggested industry confidence in eventual legislative movement.
Next Steps Depend on Senate Timing as Draft Language Finalizes
The Senate Banking Committee postponed its January 15 markup due to unresolved questions, and the timing of the next session depends on Chairman Tim Scott. Once negotiators complete revisions, lawmakers may reschedule the hearing and return to debate.
Developers and businesses continue to follow these updates closely, as the CLARITY Act would define rules for stablecoins, disclosures, and operations across the digital asset ecosystem. Witt said enterprises need clearer guidelines to support their planning and long-term investments.
As of now, the rapid decline in approval odds reflects market concerns about stalled progress rather than a confirmed shift in legislative direction. Negotiations continue as the deadline approaches, and all sides await the next formal update from the Senate.
