On Friday, Coinbase Vice Chair Ryan VanGrack expressed his belief that the CLARITY Act is very close to congressional approval. VanGrack, a former Citadel Securities General Counsel and senior advisor to SEC Chair Mary Jo White, posted this weekend that the CLARITY Act is “on the one-yard line” and that he’s “greatly encouraged” by the language contained within the proposal.
“The CLARITY Act is at the one-yard line,” stated VanGrack. “From my years already spent at Coinbase and my time at the SEC, I know what a crucial unlock a regulatory framework will be to protecting millions of American consumers who use crypto in their day-to-day lives.”
As it’s currently written, the CLARITY Act would provide a regulatory framework for prediction markets that Coinbase and other exchanges sponsor through a backend hosting agreement with Kalshi. Although the ability to passively pay yields on stablecoin holdings is prohibited, the language in the bill would still allow exchanges to offer incentives and rewards linked to digital asset transactions.
If the legislative proposal is passed as is, prediction market outcomes related to sports events would be exclusively regulated by the federal government, further immunizing these products from state and tribal gaming laws.
Traditional banks are pushing back against how the CLARITY Act is currently written; JPMorgan Chase CEO Jamie Dimon has even vowed to lobby against its potential passage. If exchanges like Coinbase can offer incentives on their account holders’ stablecoin transactions, they will be able to bypass strict consumer protection regulations that banks must adhere to, according to Dimon.
Tribes and state gaming authorities are also vehemently opposed to any type of prediction market product that involves forecasting a sports-related outcome. Following the Supreme Court’s 2018 repeal of PASPA, many states legalized online sports betting. According to tribes and states, sports-based event contracts hosted by prediction markets are nothing more than sports bets that should, by law, be regulated, taxed, and licensed through those regional jurisdictions.
With the 2026 general midterm elections looming, many experts opine that the August 7th congressional recess represents a hard deadline for the passage of the CLARITY Act in 2026. Securing the necessary 60 cloture votes in the Senate before then is seen as a challenging prospect due to higher priority legislation, such as the National Defense Authorization Act (NDAA), being on the calendar.
Without the CLARITY Act in place, prediction market exchanges would be forced to rely solely on the CFTC’s preemptive authority to justify their status in various legal battles that are currently pending across the nation. Further mainstream adoption of digital assets could also be put on hold if no final Senate vote on the bill is forthcoming in the next 25 days.
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