Citi (C) said the Clarity Act remains a key catalyst for the legalization of digital assets in the United States, but progress has been slowed by negotiations on its most controversial provisions.
Although the Senate Agriculture Committee has advanced its version of the bill, the bank noted that the Banking Committee still controls the thorniest issues, so the timeline is uncertain.
Even during a possible shutdown, lawmakers are expected to continue working and the target date in the coming months remains achievable, although there is a growing risk that final passage of negotiations could be delayed beyond 2026.
“We view the passage of the Clarity Act as an important catalyst for the development/legitimization of digital assets,” analysts led by Peter Christiansen said in a report on Friday.
Crypto market structure legislation seeks to define who regulates digital assets in the United States, how tokens are classified, and which activities fall under securities or commodities laws. The framework is critical to provide legal clarity for cryptocurrency companies and investors, reduce regulatory overlap and bring activity back home after years of enforced regulations forced companies to look offshore.
Supporters of the bill argue that clear rules will boost institutional adoption, encourage innovation and curb offshore risks, while critics warn that drawing unclear lines could stifle decentralized technology.
Analysts have labeled the definition of decentralized finance (DeFi) as the biggest hurdle, with debate centering on defining the point at which decentralized protocols, software and developers become regulated service providers.
Analysts said that an overly strict framework could put pressure on Web3 development, decentralized exchanges, derivatives, stablecoin yields, and Layer-2 networks, and that any compromise would likely depend on regulation and surveillance rather than pure software neutrality.
Analysts also said they believe there is more room for compromise on stablecoin rewards, suggesting options such as limited-time benefits or alternative incentive structures, although banks warn of regulatory arbitrage and cryptocurrency firms see rewards as key to adoption. Citi said the issue would not harm its long-term view on cross-border and business-to-business stablecoin use.
Regarding tokenized stocks, the report said that concerns about bypassing traditional market infrastructure have caused resistance, but potential solutions include clearly classifying tokens as securities, keeping allocations within existing tracks, using hybrid settlement models, or launching SEC pilots. Such approaches can support innovation without disrupting the securities value chain, the report added.
Coinbase’s (COIN) decision to end support for U.S. market structure legislation will not derail the process, investment bank HSBC said in a report earlier this week, suggesting that while the exchange’s CEO Brian Armstrong prefers no bill to a bad bill, he may be open to sensible compromises.
Read more: HSBC says Coinbase’s opposition won’t hinder U.S. cryptocurrency market structure bill
