Clarity Delayed: Legislative Delays Threaten Crypto Market Structure Framework

Risk Outlook: August 12, 2026

Aug 12, 2026

Welcome to the Stepwise Risk Outlook, which highlights and contextualizes over-the-horizon developments in key regions of the world and industries of the global market. Today’s featured deep dive by Samuel Bloebaum examines the status of the Clarity Act.

Clarity Delayed: Legislative Delays Threaten Crypto Market Structure Framework

By Samuel Bloebaum

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The Digital Asset Market Clarity Act (“Clarity Act”) faces increasingly formidable obstacles to congressional approval. According to its proponents, the act will provide regulatory frameworks for digital assets and related facilitators and bring greater stability and confidence to a cryptocurrency industry that has faced years of inconsistent regulatory standards. While a limited path to passage in September remains, digital asset service providers face heightened regulatory uncertainty heading into 2027. The failure of traditional banking and digital asset service providers to reach a compromise on the legislation, combined with the increasing polarization of cryptocurrency in US politics, contributed to a series of congressional delays that may push the debate past the window of opportunity for passage. Failure to pass the Clarity Act in 2026 will not restore the US financial system to the status quo ante, given the cryptocurrency industry's continued growth despite regulatory uncertainties. However, it will lead to a prolonged period of instability for digital asset service providers and their significant user base.

In today’s full analysis:

A Promise of Clarity
Cryptocurrency Politicization
Continued Regulatory Instability for Crypto

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Global

Russian President Putin warned that Russia will respond in kind if European countries start to seize Russian merchant vessels. The Russian president’s comments are in reaction to increasing pressure on the Russian shadow fleet by European countries, from new sanctions to detaining some ships and their crew for inspections to ferret out sanctions evasion activities. European states are moving from symbolic boardings towards sustained maritime law enforcement intended to disrupt Russia’s shadow fleet and raise the costs of sanctions evasion. Over the past three months, Italian, French, UK and Swedish navies have boarded and inspected sanctioned oil tankers.

Tensions between Russia and Western Europe are escalating amid growing risks of a direct confrontation. German military officials are warning that Russia has been systematically using drones to probe air defenses in Europe, looking for weaknesses to exploit for a wider conflict with the West. A US intelligence assessment similarly advised that President Putin’s risk calculus has shifted and is testing NATO’s unity and the Trump administration’s willingness to respond to an attack on a NATO ally.

Read More: Reuters [paywall], International Institute for Strategic Studies, Wall Street Journal [paywall]

Europe

The German government is set to advance intelligence agency reforms today. The draft law would enable the Bundesnachrichtendienst (BND), Germany’s equivalent of the CIA, to not only collect information but also conduct operations abroad once an active threat is declared. These activities could include conducting cyber operations to disable a hostile threat or, say, disrupt the production of weapons systems. The law will loosen the data protection procedures for collected signals intelligence and also enable the BND to collect information domestically if it is related to a foreign file, including domestic telecoms data. Once the draft is approved by the German government, it will be sent to the lower and upper chambers of the legislature for debate after the August recess, possibly in September.

Reforms empowering the BND have been in the works for months but are emboldened after last week’s failed drone attack at the Leipzig airport. The original BND reform push was delayed so that an interconnected reform of the Federal Agency for the Protection of the Constitution (BfV) could be adjoined. Germany’s restrictions on the BND have historically been tighter than those of most European countries as a legacy of both Nazi Germany and the East German Stasi. But as a consequence of Germany’s Zeitenwende to independent military power, the government anticipates elevating the BND’s competencies to that of most other European states.

Read More: Welt [in German, paywall], Politico, The Economist [paywall]

Middle East

Hopes for a deal to open the Strait of Hormuz faded. After Iran and Oman appeared to come to an agreement on an arrangement to administer the Strait (with “voluntary” tolls), Iran demanded concessions (essentially including a return to the June MOU) from the US. But the Strait remained closed and the blockade actively in force as the US continued to apply economic and kinetic pressure to get a better deal.

What will it mean for the region if there is no deal in the long term? The oil market will be reordered. The oil market is hanging on for now, but largely on the back of reduced Chinese demand that cannot continue forever. Major exporters are already rerouting away from the Strait of Hormuz, with some analysts predicting that it will be obsolete in two years. For Strait-locked states like Qatar and Kuwait, pipeline construction cannot come soon enough. Long-term elevated prices will be normalized.

Prolonged instability will also damage regional non-oil economies and further fracture security arrangements. Tourism has cratered, and while investment in major Gulf economies has mostly barely lagged, long-term revenue dips from Strait closure could harm the sovereign wealth funds that back economic diversification. Finally, American primacy is being called into question, with US partners diversifying their partnerships and seeking bilateral detente with Iran.

Read More: Reuters [paywall], The Economist [paywall], CNBC, Atlantic Council, Stimson Center

Asia-Pacific

Forty-one nations issued a statement on Tuesday calling on nuclear-armed states to provide at least 24 hours advance notice of ballistic missile tests, an apparent response to growing concerns over China’s recent firing. On July 6, China launched an unarmed, nuclear-capable ballistic missile from a nuclear-powered submarine into the South Pacific. While Beijing provided advance notification to some governments, many said they received only a few hours’ notice with insufficient detail. Many governments, including Pacific Island nations, quickly criticized the test, while Beijing defended it as routine military training and said its notification demonstrated transparency.

The episode highlights broader concerns over strategic signaling in the Indo-Pacific. North Korea launched its 11th suspected ballistic missile of 2026 on Wednesday, sending it roughly 700 kilometers toward waters off the Korean Peninsula just days before the US and South Korea begin the Ulchi Freedom Shield exercises. While the launch may have been scheduled, its timing likely also served as a signal of defiance toward the allies. Together, the tests underscore how missile activity is increasingly being used not only to develop capabilities but also to signal strategic intent, test regional reactions and shape perceptions of military reach.

Read More: US Department of State, CGTN, Reuters [paywall]

Americas

Deputy Secretary of State Christopher Landau traveled to Trinidad and Tobago and Guyana from August 9-12 to advance US engagement. In Trinidad and Tobago, Landau met with Prime Minister Kamla Persad-Bissessar to discuss energy cooperation, regional security, and economic ties, while also participating in the ribbon-cutting ceremony for Ibis Steel Company T&T Ltd. In Guyana, he met with President Irfaan Ali and senior cabinet officials to discuss expanding bilateral economic cooperation, increasing investment opportunities, and strengthening collaboration in strategic sectors. The visit comes amid a broader US effort to deepen partnerships in the hemisphere and promote shared priorities related to energy and security.

Both Caribbean countries’ roles are evolving in regional and global energy markets. Guyana has emerged as one of the world’s fastest-growing oil producers following a series of major offshore discoveries, transforming the country’s economic outlook and making it an increasingly important supplier of crude oil. Trinidad and Tobago is seeking to leverage its long-standing oil, gas, and petrochemical expertise to become a regional leader in the production of green hydrogen and associated products such as green ammonia and methanol. Under its 2022 Green Hydrogen Strategy, Trinidad aims to use renewable energy and existing industrial infrastructure to build a large-scale green hydrogen industry over the coming decades, positioning itself as a hub for low-carbon fuels and exports.

Read More: State Department, Trinidad Express, GH2

Africa

Attacks against energy infrastructure in Libya and the killing of an intelligence chief underscore the persistent roadblocks to stability in the country. Drone strikes against energy infrastructure in Zawiya ignited a large fire at a fuel-storage facility within the Zawiya oil complex, which houses Libya’s largest operating refinery. The refinery itself was reportedly not damaged, and operations were temporarily disrupted. Separately, Major General Fawzi al-Mansouri, the military intelligence chief of Khalifa Haftar’s Libyan National Army, was killed in a car bombing in Benghazi. No group has claimed responsibility for either attack, and it is unclear if the incidents are related. However, the strikes in Zawiya followed clashes earlier this month between the First Support Brigade and the 103rd Battalion, local militias that appear to be affiliated with elements of the western government in Tripoli.

Disarming militias and continued hostility towards Haftar-aligned figures present substantial challenges to the Trump administration’s proposed power-sharing agreement. It is unclear whether the US and other mediators have established a concrete process for disarmament, as public reporting on US envoy Massad Boulos’ proposal has focused primarily on efforts to unify the rival western and eastern governments. However, establishing a unified military would require integrating the numerous armed groups operating throughout the country. Failure to resolve the status of these militias could produce future conflicts over influence, threatening the country’s recovering energy sector and sowing greater political instability. Furthermore, should evidence emerge that a Tripoli-aligned individual or group was responsible for al-Mansouri’s assassination, tensions between Haftar and the western government could flare, risking a prolonged pause in peace talks.

Read More: Al Jazeera, Reuters [paywall], AP, Libya Herald, The National, Stepwise Risk Outlook

Geoeconomics

Brazil’s central bank is preparing Pix, its proprietary system for making instant transfers and payments through banking apps, for cross-border use. Its new management report says officials are considering direct links with foreign instant-payment systems and participation in multilateral payment hubs. These connections could allow remittances and purchases to settle in local currency within seconds, lowering costs and reducing intermediaries. This remains an assessment, with no partner or timetable announced. Still, Pix has the scale to support expansion: in 2025, it processed nearly 80 billion transactions worth more than 35 trillion reais, while consumer-to-business payments accounted for 43% of all transactions.

The expansion would create a larger geoeconomic challenge for US payment companies while only modestly reducing Brazil’s reliance on dollar-based finance. USTR cited policies favoring Pix and the central bank’s dual role as operator and regulator among the grounds for its Section 301 action, which imposed new 25% tariffs on certain Brazilian goods. Connecting Pix internationally would intensify competition with Visa, Mastercard and correspondent banks by shifting more commerce onto public instant-payment platforms. It would not, however, eliminate the dollar’s role, as cross-border payments still require foreign-exchange conversion and liquidity. Countries must also align rules for customer identification, fraud, data sharing and settlement. If these issues are resolved, Brazil could export its payment model and gain influence over the infrastructure supporting regional commerce.

Read More: Reuters [paywall], Banco Central do Brasil, USTR, PIIE

Energy

AI could end up being more of a boost for traditional energy sources than for renewables. According to one study, productivity gains in oil and natural gas industries could end up outweighing potential AI-related increases in renewable energy. The report concluded that AI would have to create at least a 4% increase in renewables to balance out a 1% increase in oil and natural gas productivity gains.

Changes in productivity could also be more important than power generation for data centers. The relationship between energy and AI covers data center construction and how data centers will be powered going forward, whether that be with renewables or with traditional energy sources. The report found that the potential impact on productivity in the oil and natural gas sectors would outstrip the direct impact of how data centers are powered. Overall estimates of power demand for data centers vary widely, which will also have an impact on the relationship between AI infrastructure and energy infrastructure.

Read More: Financial Times [paywall], Axios

Transnational Crime and Corruption

Hungary’s Prime Minister’s Office announced it filed a criminal complaint over alleged misuse of state funds for Viktor Orbán’s social media campaigns. The announcement alleged that, since 2022, HUF 4 billion (~USD 12.7 million) of public money was spent on a noncompetitive public contract for online photograph and video campaigns as well as social media monitoring summaries. The Prime Minister’s Office alleged that Orbán and his advisors improperly avoided public procurement processes in awarding the contract, which was priced far above international standards. The contract was awarded to a company owned by Fanny Kaminski, who acted as a press adviser to Orbán.

Orbán’s party Fidesz accused the Hungarian government of political persecution. Since assuming office in May, Prime Minister Péter Magyar has orchestrated sweeping anti-corruption investigations targeting initiatives from Orbán’s time in office.

Read More: Bloomberg [paywall], The Budapest Times, Telex (in Hungarian), Cato Institute

Defense

Australia will potentially be the first non-US user of new American air-to-air missiles. Australia’s defense minister Richard Marles announced earlier this month that Canberra will spend around $520 million USD on procurement of the AIM-260A Joint Advanced Tactical Missile (JATM) for the country’s fighter jet fleet. While the exact quantity of missiles is not known, the total price tag for the deal suggests that it is under 100 missiles. However, the procurement will take years to come to fruition, with missiles likely not being delivered until the beginning of the 2030s.

The US is currently engaged in a major push to build out missile production capacity. Earlier this year, the Pentagon initiated new framework agreements to accelerate production of a number of different missile systems and their components, including air defense interceptors. More recently, the Pentagon has moved aggressively to triple production of Patriot interceptors and quadruple production of THAAD interceptors as the US’ war with Iran has eaten into stockpiles and created concerns about defense readiness.