CLARITY Act Stalls in the Senate as Bitcoin and Ethereum ETFs Pull in Opposite Directions

CLARITY Act Stalls in the Senate as Bitcoin and Ethereum ETFs Pull in Opposite Directions

America's crypto industry is watching two very different storylines unfold in Washington and on Wall Street this week. In the Senate, the market's most anticipated piece of regulatory legislation is running out of runway before recess. Meanwhile, institutional investors are quietly rotating between Bitcoin and Ethereum ETFs, sending a mixed signal about where conviction actually lies heading into the fall.

The CLARITY Act Is Running Out of Time in 2026

The Digital Asset Market Clarity Act — widely known as the CLARITY Act — has cleared two of the three hurdles it needs to become law. The House passed its version back in the summer of 2025, and the Senate Banking Committee advanced its own draft in mid-May 2026. What's missing is the one vote that matters most: a floor vote in the full Senate.

As of late July, no floor vote has been scheduled, no cloture motion has been filed, and Senate Majority Leader John Thune has signaled that crypto market-structure legislation isn't a priority before the chamber breaks for its summer recess around August 7. Instead, the Senate's remaining calendar is dominated by nominations and a Russia sanctions bill, leaving the industry's signature legislative priority effectively parked.

Prediction markets have taken notice. Odds on Polymarket for the bill passing sometime in 2026 have slid from above 80% back in February to a low near 24% in mid-July, before recovering slightly to around the mid-30s as negotiations continued behind the scenes. Analysts describe the delay as the removal of the one crypto-specific catalyst that was expected to unlock a fresh wave of institutional buying. Without a market-structure framework in place, the SEC and CFTC continue to divide oversight of digital assets through guidance and interpretation rather than statute — an arrangement industry groups have long argued leaves too much room for uncertainty as a new administration or Congress could unwind it. If the bill misses the recess window, most observers now expect it to be pushed into the fall, where it would have to compete for floor time with government funding negotiations and the run-up to the midterm elections.

Bitcoin ETFs Bleed Out While Ethereum Keeps Attracting Inflows

While Washington stalls, institutional money managers are sending their own signal through ETF flows — and it isn't uniform across the market.

US spot Bitcoin ETFs recorded a net outflow of roughly $61.5 million over the past week, with nearly all of that damage concentrated in a single trading session that saw funds shed more than $265 million in one day. BlackRock's IBIT, Fidelity's FBTC, and Grayscale's GBTC accounted for the bulk of the redemptions, a pattern partly attributed to month-end rebalancing rather than a wholesale change in sentiment.

Ethereum told a different story. Spot Ethereum ETFs extended their streak to four consecutive weeks of net inflows, closing out the month with more than $365 million added — only the second positive month for the category so far in 2026. Solana funds also posted modest net inflows for the week, while products tied to Hyperliquid saw outflows consistent with the token's double-digit weekly decline.

Zoomed out, the picture is one of stabilization rather than a strong directional bet. Bitcoin ETFs still closed the month of July with a net positive $172.4 million, ending two straight months of outflows after nearly $7 billion left the category across May and June combined. Ethereum, meanwhile, remains roughly $1.1 billion in net outflows for the year overall, meaning its recent run of inflows looks more like a recovery from a deep hole than the start of a new structural trend.

What It Means for U.S. Crypto Investors

Together, these two threads point to an industry in a holding pattern. Regulatory clarity — the one development that market participants have repeatedly flagged as the missing piece for larger-scale institutional adoption — looks unlikely to arrive before year-end at the earliest, pushing the CLARITY Act's fate into a crowded fall legislative calendar shaped by budget fights and midterm politics. At the same time, institutional capital isn't leaving crypto altogether; it's rotating, with Ethereum quietly building momentum even as Bitcoin funds work through a bout of profit-taking and month-end repositioning.

For US investors, the message is one of patience over conviction. Neither the legislative nor the flow data currently points to an imminent breakout in either direction, and both storylines are likely to remain in focus through the rest of August as the Senate's recess approaches and fresh ETF flow data rolls in each week.