Will the crypto market be under pressure in Q1? The progress of the Clarity Act becomes a key factor.

The Clarity Act aims to provide "clarity on the regulatory boundaries" for the U.S. digital asset (crypto asset) market. Introduced in the House of Representatives on May 29, 2025, primarily by Rep. French Hill, it is currently stuck in the Senate Reception and Transfer Committee. Market participants are concerned that if the Clarity Act does not make significant progress in Q1, the delay will become increasingly detrimental.

The reasons are multiple:

January is one of the few available structural legislative windows for the Senate.

January to March is the main period for the Senate to process highly complex, non-urgent bills. Clarity, being a market structure bill that is "highly complex, highly controversial, and non-urgent," naturally falls into the lower priority category. If it fails to make substantial progress (such as clear action at the committee level) in January, it is easily "naturally squeezed out" of the overall legislative agenda.

Clarity is not a policy patch, but a "restructuring of regulatory power".
These types of bills are characterized by slow progress, repeated requests for amendments, and a high likelihood of being postponed rather than rejected.

Once the elections are delayed until after the midterm elections, the variables will increase dramatically.

Midterm elections = a reshuffling of the congressional power structure, with priority reshuffling for bills that have been advanced but not yet completed. Bills like CLARITY, which are not yet in effect, lack strong bipartisan consensus, and heavily rely on the support of current committees, are very likely to be "re-evaluated" or even redrafted after the power structure changes.

If the Democrats gain an advantage in the midterm elections, the probability of the bill passing will be even lower. The mainstream Democratic stance tends to be: strengthening the coverage of securities laws, retaining the flexibility of regulatory agencies in interpretation, and being highly cautious about "restricting the space of law enforcement agencies through legislation".
The core effect of CLARITY is to predefine certain regulatory boundaries, limit "regulation by enforcement," and reduce the SEC's discretionary power in gray areas. Therefore, in a Democratic-dominated Senate, CLARITY is more likely to be: required to undergo significant revisions (substantive rewriting), broken into multiple sub-bills, or shelved for an extended period.

Now can you understand the concern and anxiety of crypto enthusiasts in the US regarding the CLARITY bill and the current slump in the crypto market?