Grayscale: Crypto’s Plan B Without Clarity Act

CLARITY Act Stalled, Grayscale Outlines Crypto’s Path Forward

The CLARITY Act has been caught in political limbo as lawmakers depart for their August recess, prompting Grayscale to detail a potential roadmap for the U.S. cryptocurrency industry should Congress fail to enact the long-awaited market structure legislation this year.

While acknowledging that a delay would initially represent a setback, the digital asset manager believes a path forward exists. Grayscale has previously commented on the bill’s potential and, in its latest analysis, conceded that an agreement within the current year remains technically feasible. However, the realities of the Senate’s schedule and the approaching midterm elections have made official passage increasingly challenging.

The report emerges as Senate Majority Leader John Thune filed for cloture on the motion to proceed with the legislation before lawmakers left Washington last week. This procedural vote is slated for September 15 and requires 60 votes to succeed. Crucially, this is not a final vote on the bill itself, but rather a determination of whether senators can move forward to formally consider it.

Should this procedural hurdle not be cleared, Grayscale argues that Washington possesses alternative avenues to advance crypto regulation, even in the absence of comprehensive congressional action. Foremost among these is the role of regulatory agencies.

Both the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have demonstrated a more accommodating stance toward the crypto industry in recent years. These bodies can continue to develop rules and interpretations governing the market, even if Congress remains inactive.

Nevertheless, these regulators face limitations in their ability to achieve significant progress without new legislation, particularly concerning the establishment of clear and permanent jurisdictional boundaries between them. Despite these constraints, they can still address key industry inflection points, including tokenized securities, custody, and trading.

On a more positive note, institutional involvement in the crypto space has surged over the past few years, driven by the introduction of spot ETFs, stablecoins, tokenized real-world assets (RWAs), and increasing Wall Street participation, all occurring while the CLARITY Act remains in legislative flux. Zach Pandl, Grayscale’s Head of Research, highlighted that the GENIUS Act already provided a federal framework for payment stablecoins, which he described as a significant achievement.

The bill’s stagnation at the close of the business week was a blow to the industry, though Thune’s cloture filing offered a glimmer of hope. However, several critical issues persist, including ethical disagreements, rules surrounding illicit finance, and specific language originating from the Senate Agriculture Committee.

Republicans currently lack sufficient votes to advance the legislation independently, even with unanimous support from their party, as they require at least seven votes from Democrats or independents. These persistent difficulties, with no clear resolution in sight, have diminished expectations for the bill’s passage this year, leading Galaxy Research to reduce its probability estimate from 50% to just 30%.