Bernstein: Clarity Act progress may not be fully reflected in market yet

U.S. virtual asset market structure legislation known as the 'Clarity Act' may be progressing more than anticipated, with Bernstein analysts stating that any positive developments related to its passage have yet to be fully reflected in market pricing.

According to The Block on April 14 (local time), Bernstein noted in a report that 'the Clarity Act appears likely to advance further than the market expected last week,' adding that 'positive surprises are clearly not yet priced into the market.' Recent polling shows passage likelihood has risen above 30%.

This outlook follows the release of the final version of the Clarity Act by Republican senators, which incorporates many Democratic requests. The final draft includes 126 substantive amendments requested by Democrats.

Notably, U.S. President Donald Trump accepted significant portions of a bipartisan ethics framework. The bill also includes provisions allowing state attorneys general to enforce related regulations, beyond requirements for presidential and public officials' virtual asset disposal or blind trust conditions.

New clauses addressing banking concerns were added as well, permitting the Treasury Secretary to activate 'circuit breakers' temporarily restricting stablecoin redemptions if large-scale deposit withdrawals from local banks occur due to payment stablecoins.

Bernstein assessed that this ethics framework represents a likely best achievable proposal. With the White House accepting state attorneys general's enforcement authority, there appears potential to secure Democratic support for final passage before the vote.

The Senate's procedural cloture vote scheduled for April 15 will be a key milestone, requiring 60 votes for further discussion. With Republicans holding 53 seats in the Senate, they need Democratic or independent support even if all Republican senators vote yes. Bloomberg reports approximately 7-10 Democratic senators may ultimately back the bill.

Bernstein labeled this week as 'a catalyst-heavy week' for crypto markets, with the Clarity Act vote followed by the Federal Reserve's interest rate decision on April 16.

Specifically, Bernstein warned that a combination of a hawkish Fed decision alongside Clarity Act failure could trigger a 'major drawdown' in cryptocurrency markets. Conversely, given current market positioning leans bearish, both crypto and related stocks may see significant movement depending on the outcome.

However, Bernstein noted that even if the bill fails, U.S. virtual asset regulation reform would not halt entirely. The analyst suggested SEC and CFTC rulemaking could accelerate instead should the Clarity Act fail to pass.