O’Leary Predicts Congress Will Tackle Crypto Rules Post-Midterms Despite Senate Setback

TLDR

• The Senate rejected the Clarity Act with only 49 votes instead of the required 60 to proceed.
• Shark Tank’s Kevin O’Leary predicts lawmakers will tackle crypto market structure legislation after the 2026 midterm elections.
• A separate tax-focused bill addressing staking, mining, and minor crypto transactions passed through the House Ways and Means Committee.
• Matt Hougan of Bitwise withdrew his pessimistic prediction after Bitcoin continued climbing despite declining passage odds.
• Both SEC Chairman Paul Atkins and CFTC Chairman Mike Selig indicate their agencies can implement crypto regulations independently.

A legislative effort to establish comprehensive cryptocurrency market regulations stalled in the Senate this week. The Clarity Act secured just 49 votes, falling 11 short of the threshold required to proceed.

The proposed legislation aimed to delineate oversight responsibilities between the Securities and Exchange Commission and the Commodity Futures Trading Commission regarding digital assets. With its defeat, these jurisdictional matters remain in limbo.

Senate Vote Blocks Clarity Act Advancement

During Thursday’s Avalanche Summit in New York, Shark Tank personality Kevin O’Leary addressed the Senate outcome. He indicated that he had anticipated the bill’s defeat.

“In my assessment, the probability of the Clarity Act succeeding was essentially nonexistent, which is precisely what transpired,” O’Leary remarked. However, he doesn’t view this as the final chapter for the legislation.

O’Leary highlighted concurrent progress on different legislation in the House. The Digital Asset Tax Certainty Act advanced through the House Ways and Means Committee this week.

This alternative legislation would establish tax frameworks for cryptocurrency operations including staking, mining, and minor transactions. The bill additionally addresses broker reporting obligations.

According to O’Leary, the tax legislation creates momentum for comprehensive market regulations. “Implementing taxation necessitates corresponding policy frameworks,” he explained.

He anticipates Congress will revisit market structure discussions following the midterm elections. O’Leary suggested this could materialize in the first or second quarter of 2026, regardless of congressional party composition.

Bitcoin Climbs Higher as Legislative Prospects Diminish

Bitwise Chief Investment Officer Matt Hougan initially took a contrasting position before the Senate vote. He had characterized the Clarity Act as crypto’s “Punxsutawney Phil,” forecasting extended market weakness should it fail.

Following the vote’s outcome, Hougan revised his assessment. In correspondence with clients, he suggested the bill’s defeat might be less consequential than media coverage implies.

Hougan examined bitcoin’s price trajectory. The cryptocurrency hit a low around $57,950 on July 1 before surging beyond $80,000 by September 4.

Throughout this identical period, Polymarket’s probability estimates for the Clarity Act’s passage this year plummeted from 39% to 14%. Hougan noted this inverse relationship contradicts expectations if the bull market truly hinged on legislative success.

He observed that major financial institutions continue expanding cryptocurrency operations without awaiting congressional action. Hougan cited Robinhood’s blockchain launch, Morgan Stanley’s Solana exchange traded fund, and DTCC’s inaugural tokenized stock settlement as illustrations.

Hougan attributed this momentum to the current composition of federal regulatory agencies. He emphasized that both the SEC and CFTC maintain crypto-friendly leadership secured through 2029.

SEC Chairman Paul Atkins has expressed readiness to tackle issues outlined in the Clarity Act through agency rulemaking. CFTC Chairman Mike Selig has conveyed similar intentions for his organization.

Nevertheless, Hougan acknowledged constraints of regulatory approaches. Agency regulations remain vulnerable to reversal under future administrations, and only congressional legislation can grant the CFTC comprehensive authority over spot cryptocurrency markets.

Bitcoin declined approximately 4% after the vote. Hougan suggested escalating interest rate anxieties and oil price fluctuations may have contributed to the pullback.

He anticipates additional volatility before sustained growth. “The bull market trajectory includes several obstacles ahead,” he stated.

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