Galaxy Cuts CLARITY Act Odds to 60% as HTX Delists Trump-Backed USD1 Stablecoin

Crypto News

Galaxy Digital has lowered its probability that the Senate passes the CLARITY Act this year to 60%, down from the 75% estimate it issued on May 22. The firm's head of research argued the chamber must act before a month-long recess that begins in late July, after which the legislative window effectively closes ahead of the midterm elections. The downgrade also reflects stalled negotiations, with provisions on ethics and illicit finance still unresolved. The market structure measure aims to define how digital assets are regulated across the blockchain sector, and its delay leaves the industry's regulatory framework in limbo.

Galaxy is not alone in cooling its outlook. Analysts at JPMorgan now see less than a 50% chance the bill becomes law this year, similarly citing a compressed congressional calendar before campaigning intensifies. One prominent investment chief struck an even more cautious note, saying Washington insiders place the odds of passage between 5% and 30%. The convergence of bearish forecasts signals growing skepticism that lawmakers can finalize comprehensive rules for DeFi and broader crypto markets in time. Each downgrade compounds uncertainty for firms awaiting clarity on how tokens, exchanges, and custody arrangements will be classified.

Procedural hurdles remain steep. The House passed its version of the CLARITY Act last year, and the Senate Agriculture and Banking Committees have advanced their own drafts, but the bill still needs at least 60 floor votes to clear without prolonged debate. Reconciliation between competing texts, an amendment process, and a return to the House for final approval all loom. Senator Cynthia Lummis, chair of the Banking Subcommittee on Digital Assets, has escalated her public campaign, posting repeatedly that the measure cleared committee and that supporters "did not come this far to quit at the 5 yard line."

In a separate flashpoint, exchange HTX announced it will permanently remove the Trump-backed World Liberty Financial USD1 stablecoin from its platform. Beginning June 7, the venue said it will systematically convert all eligible retail USD1 balances into Tether at a strict one-to-one valuation. HTX had already suspended the WLFI, USD1, and BTC and ETH trading pairs against USD1 as of June 5 to safeguard user assets and limit systemic risk. The delisting underscores how quickly issuer-level decisions can ripple through a centralized exchange and reshape liquidity for an entire altcoin ecosystem.

The dispute escalated after World Liberty Financial froze access to several HTX-controlled wallet addresses. HTX management insists the blocked addresses held standard retail customer funds rather than illicit capital, framing the freeze as a violation of user property rights. World Liberty, which manages both USD1 and the WLFI governance token, did not name HTX directly but reminded counterparties of its compliance protocols and its technical ability to sever ties with restricted networks. The standoff highlights a deepening conflict between offshore platforms and US-aligned issuers enforcing sanctions at the protocol level.

The catalyst traces to late May, when British authorities sanctioned Huobi Global S.A., a Panamanian entity, alleging it helped process roughly $1.5 billion in illicit volume tied to the A7 payments network and the heavily sanctioned Russian exchange Garantex. World Liberty appears to have initiated its wallet freezes to comply with those restrictions. HTX, however, forcefully rejected the premise, arguing the modern platform operates entirely independently from the legacy entity named in the UK designations. The episode shows how sanctions targeting on-chain infrastructure can cascade into account-level freezes affecting ordinary traders.

Taken together, these developments point to a single dominant narrative this cycle: regulatory tightening on multiple fronts. In Washington, a shrinking calendar threatens the market structure legislation the industry views as foundational, leaving classification questions unanswered. Abroad, sanctions enforcement is pushing compliance deep into the protocol layer, where issuers can freeze assets and exchanges retaliate by delisting tokens. Both stories reveal an industry increasingly shaped by political timetables and geopolitical risk rather than purely market dynamics. As lawmakers stall and regulators act, participants face a landscape where the rules, and the assets themselves, can shift with little warning.