The 'Clarity Bill' Draft Release and Political Conflict: The Future of the Virtual Asset Market

On July 22, 2026, the release of the updated Digital Asset Market Clarity Act draft intensified debates within the U.S. Congress. The situation is characterized by a direct clash between Republican optimism and Democratic skepticism regarding ethical issues. While key negotiators, including Senator Cynthia Lummis, have welcomed the progress of the bill, the focus of the discussion has shifted from market structure to the executive branch's personal financial interests, leaving the virtual asset industry facing uncertainty between regulatory breakthroughs and partisan gridlock.

I am pleased that the updated bill has been released. However, further discussion is needed regarding some provisions, including ethical regulations.

Senator Lummis emphasized that the draft released on July 22, 2026, is a significant step toward establishing a regulatory framework for virtual assets. However, she acknowledged that ethical guardrails and consumer protection provisions remain sensitive issues, leaving room for further negotiations to reach a bipartisan consensus. The release of this draft demonstrates the Republican Party's commitment to securing clarity in the virtual asset market while simultaneously suggesting that the political hurdles to be overcome in the legislative process remain high.

Standoff Over Ethical Regulations: Trump and the Conflict of Interest Issue

The Democratic Party is strongly opposing the bill, criticizing it as significantly lacking in ethical aspects. According to a review by minority staff on the Senate Banking Committee, President Donald Trump's interests related to virtual asset businesses have emerged as a key point of contention in the bill's deliberation. Senator Elizabeth Warren pointed out that President Trump earned over $1.4 billion through virtual asset ventures in 2025 alone, arguing that conflict-of-interest prevention requirements for public officials must be further strengthened.

• The Democratic Party is demanding that strict conflict-of-interest standards be applied when public officials are involved in virtual asset policy.
• An analysis has been raised that virtual asset income accounts for approximately two-thirds of President Trump's total income.
• The banking sector and some Democratic lawmakers are maintaining their position that consumer protection provisions must be stronger than the current draft.

These political frictions are acting as a major factor making the passage of the bill uncertain. While the Republican Party wants regulations at a level that does not hinder market innovation, the Democratic Party is firmly opposing this, prioritizing administrative transparency and consumer safety. If the gap between the two sides' positions does not narrow, the introduction of clear regulatory guidelines, which the virtual asset industry has been eagerly awaiting, is highly likely to be delayed once again.

Since the release of the draft bill, the positions of key stakeholders have been sharply divided. Not only in political circles but also in the financial and virtual asset industries, opinions for and against are split according to their respective interests. The following table summarizes the reactions and key concerns of major stakeholders following the release of the draft on July 22, 2026.

[build_table: Stakeholder Reactions to the July 22 Clarity Act Draft]

Changes in Market Sentiment and Fluctuations in Polymarket

Ahead of the bill's release, expectations were high on the prediction market Polymarket. On July 21, 2026, as rumors circulated that President Trump had agreed to ethics clauses, the probability of the Clarity Act passing within the year surged by 11 percentage points to 43%. However, as the actual text of the draft was released on July 22 and the strong opposition from the Democratic Party was confirmed, the market showed volatility again and returned to a cautious stance.

Coinbase, a giant in the virtual asset industry, once again expressed its refusal to support this draft. The biggest point of contention is the specific language in the bill that prohibits stablecoin yields. Coinbase criticized this, fearing that such regulations would hinder the growth of the stablecoin ecosystem and arguing that it contradicts the 'pro-virtual asset' nature that the bill claims to represent.

Financial analysis firm Mizuho Securities also sent a warning message through a report on July 22, 2026. Mizuho analyzed that while it is positive that the Clarity Act provides a regulatory framework, it could have a long-term negative impact on major stablecoin issuers such as Circle. The explanation is that new regulatory compliance burdens and restrictions on revenue models could worsen the profitability of issuers.

Definition of Regulatory Guardrails: Division of Roles between the SEC and CFTC

This bill contains an attempt to resolve jurisdictional disputes between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The draft includes elements of the Lummis-Gillibrand Responsible Financial Innovation Act, aiming to clearly define the oversight agency based on the nature of the digital asset. This is considered a key mechanism to resolve the regulatory ambiguity that has been consistently raised by the industry.

[build_table: Clarity Act Legislative Timeline (July 2026)]

Now, all eyes in the market are on the final deadline of August 10, 2026. This day marks the beginning of the Senate's state work period, representing the last opportunity to pass the bill before the recess. If the bill is not processed by August 10, discussions will be pushed back to mid-September, which increases the risk of the bill being derailed as it gets caught up in election-season political maneuvering.

For the virtual asset industry and investors, the next few weeks are expected to be a critical turning point that will determine the direction of the regulatory environment. The market's trajectory is expected to diverge significantly depending on whether a political compromise is reached dramatically or if legislation fails due to partisan conflict. As the August 10 deadline approaches, market volatility driven by news from Washington is expected to further intensify.