The Clarity Act Moves Forward: There was little news on the U.S. Clarity Act during July until recently. The bill is intended to give the U.S. crypto industry clearer rules. Among other things, it could strengthen customer protections, improve operating conditions for crypto companies, and make it easier for traditional financial institutions to engage more deeply with digital assets.
Early last week, U.S. President Donald Trump and the White House had agreed to an ethics package for the Clarity Act. The package addresses the main recent obstacle to securing Democratic support, which is necessary for the bill to pass. It will set out how elected officials may privately engage with digital assets. This issue is particularly relevant because of Trump and his family’s private activities in the crypto market. Democrats have not endorsed either the new ethics package or other parts of the Republican draft. However, they have said they will continue working with Republicans in the hope of finding a solution.
The next few weeks will be critical if the Clarity Act is to pass in 2026. The U.S. Senate, which is next in line to vote on the bill, begins its recess in the third week of August. If the Senate does not vote before then, it is unlikely to do so later this year because of the midterm elections in November.
Prediction markets currently give the bill a 37% chance of passing this year, implying a 63% chance that it will not. Despite the recent progress, the estimated probability of passage has remained flat over the past few weeks.
Middle East Conflict Escalates Again: Since our previous Firi Weekly, the conflict between the U.S. and Iran has re-escalated. The U.S. carried out significant attacks on Iran from early July until a few days ago, while Iran has launched attacks on neighboring countries. In practical terms, the ceasefire appears to have collapsed. Trump has also recently said that the memorandum of understanding signed in June, which was intended to support a longer-term agreement, is no longer in effect. Meanwhile, the U.S. has reinstated its blockade of the Strait of Hormuz for vessels travelling to and from Iranian ports and coastal areas.
This has pushed oil prices higher again, as shown in the second chart. As a significant share of the world's oil supply passes through the Strait of Hormuz, the restrictions in the area are reducing the amount of oil available to global markets.
The higher oil price may contribute to higher inflation because oil is essential not only for transport, but also for producing a wide range of goods. This could make central banks less willing to cut interest rates. Higher interest rates may, in turn, make lower-risk investments more attractive than crypto, meaning that the renewed escalation in the Middle East is negative for the crypto market.
DTCC Tests Tokenization: A few weeks ago, the U.S. Depository Trust & Clearing Corporation (DTCC) completed its first live production trades involving tokenized traditional assets. Tokenization means issuing traditional assets, such as equities, commodities, and bonds, on a blockchain. Once issued on networks such as Ethereum or Solana, these assets can be traded and used across a broader range of decentralised applications.
DTCC is the world’s largest clearing house and processes trillions of dollars in transactions each day. It helps ensure that assets change hands correctly in trades involving stocks, bonds, and similar instruments. It also maintains accurate records of asset ownership.
Several of the world's largest financial institutions, including JPMorgan Chase, Goldman Sachs, and BlackRock, participated in the tests. This once again suggests that both DTCC and other major financial institutions are taking tokenization seriously. DTCC expects to launch its tokenization service more broadly in October this year.
