GM. This is Milk Road, the crypto newsletter that gives you the cheat sheet before the test.

​Here’s what we’ve got for you today:

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THE CLARITY ACT VOTE IS TOMORROW. HERE'S WHERE THINGS STAND. 🥴

Tomorrow, the Senate Banking Committee votes on the CLARITY Act.

It's the first crypto market structure bill of its kind in U.S. history. 

If you care about whether crypto firms can operate in America without getting sued into oblivion, tomorrow matters.

ICYMI: the bill splits regulatory authority between two agencies… 

The SEC (which oversees stocks) and the CFTC (which oversees commodities like oil and gold). Right now, nobody knows which agency is in charge of what crypto asset. 

The CLARITY Act draws that line.

The bill already cleared the House with bipartisan support, but the Senate has been the bottleneck ever since.

Going into May, three things stood in the way:

Here's the scorecard 24 hours out:

1. Developer protections: maintained. The Blockchain Regulatory Certainty Act made it into the bill almost completely intact. The only carve-out is for devs with "specific intent and knowledge of crime."

2. Stablecoin yield: cleared up (for now). The yield question has been settled in the latest text. But the American Bankers Association is still furious, which means new issues could still surface somewhere.

3. Ethics: still seemingly unresolved. Senator Warren is hammering on the lack of any provisions to stop Trump-family crypto profits, and she's not letting it go quietly.

Two out of three blockers are mostly handled (not bad!). 

But the banking lobby’s moodiness and Senator Warren’s ethics push are still enough to make tomorrow a coin flip…

THE CLARITY ACT VOTE IS TOMORROW. HERE'S WHERE THINGS STAND. (P2) 🥴

About those banks…

The American Bankers Association has been on a full campaign to kill this thing. 

Their basic argument: stablecoins are too attractive, deposits will flee, banks will die, and the economy will collapse.

Unfortunately for them, Galaxy did some deep modeling on this and found foreign inflows into U.S. stablecoins would beat domestic deposit migration roughly 2-to-1. 

Translation: more money flowing in than flowing out, plus massive new demand for U.S. Treasury debt.

The banks know this (but they're fighting anyway, as it threatens their margins).

On top of that, we have this:

Bringing the whole vote down to a handful of senators…

Five Democrats (Warner, Alsobrooks, and Gallego among them) are the swing votes. If all five vote yes tomorrow, the odds of CLARITY becoming law go very high. If none do, very low. 

On top of that, any single uncommitted Republican could threaten to blow the whole thing up.

So what’s the smart (insider) money saying?

Polymarket has the chances of CLARITY being signed into law in 2026 at 60%. That's down 6 points this week, and down 19 points from its weekly high of 79%.

We had Alex Thorn from Galaxy on the podcast yesterday for a full breakdown - and he puts chances of passage at 55%.

Our own John Gillen flipped bearish on this two weeks ago - his read: the path exists, but the margin for error is gone.

Now, to be clear - tomorrow's vote doesn't make the bill law. 

What it does is decide whether CLARITY has a real shot at hitting the President's desk by August, or whether crypto risks going down the path of ‘regulation-by-enforcement’ again.

If it fails here, it could take years to come back around. 

If it comes back at all.

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This morning: Japan's Blockchain Foundation announced a yen-backed stablecoin called EJPY, running on Japan Open Chain and Ethereum.

Siiiigh: Wholesale inflation just came in worse than expected - U.S. Producer Price Index came in at 6% when analysts were looking for 4.9%.

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