According to Ron Hammond, Wintermute's head of policy, the Crypto Clarity Act has a 30% chance of passing this year, due to various challenges including political friction and uneven legislative progress. Hammond notes that despite momentum building in Washington, a cautious outlook is necessary.

The Clarity Act aims to establish clear rules for crypto market structure regulation in the U.S., including the oversight of digital assets by the Securities and Exchange Commission and Commodity Futures Trading Commission. Hammond's estimate is broadly in line with other market signals, with a recent Punchbowl survey of lobbyists and staffers putting the odds at 26%, and prediction market Kalshi hovering just above even odds. The uncertainty surrounding the bill's trajectory is underscored by the spread in these estimates. Hammond sees incremental progress, with lawmakers pushing to move the bill through committee, potentially as early as April 20, although he cautions that such timelines have been fluid for months.

The passage of the Clarity Act is widely seen as crucial for institutional adoption of crypto, as it would provide clear rules on which digital assets are securities versus commodities and define how they can be traded, custodied, and regulated in the U.S. The current fragmented and uncertain framework has kept many large asset managers, banks, and pension funds on the sidelines due to legal and compliance risks. A comprehensive market structure law would reduce this ambiguity, giving institutions the confidence to increase their exposure to crypto, launch new products, and integrate crypto more fully into traditional financial systems. However, hurdles remain, particularly around the issue of whether stablecoins should offer yield, with traditional financial institutions being a major obstacle.

According to Hammond, negotiations have been stuck, with banks refusing to give way despite attempts from various sides to find a solution. The dispute has already derailed at least one compromise, and expectations for a new version are tempered. The resistance from banks is shaping the politics around the bill, particularly for Democrats, who are navigating a difficult balancing act. Hammond notes that some lawmakers who have accepted crypto industry funding are now facing a challenging situation.

Additional political headwinds could emerge in the coming months, with Hammond flagging ongoing scrutiny around former President Donald Trump's crypto-related dealings as a potential flashpoint. Despite the friction, Hammond believes the bill still has a viable path forward, with progress in committee and continued negotiations potentially keeping it alive into midyear.

For Wintermute, the stakes are high, as the firm is expanding its U.S. footprint and growing its New York team.

Hammond emphasizes that the outcome of the Clarity Act is consequential, and while he sees 'light at the end of the tunnel,' passage in 2026 will require breakthroughs that have so far proved elusive.