The crypto industry can function without the Digital Asset Market Clarity Act, but the United States risks losing new investment to rival jurisdictions if Congress fails to pass it, according to Grayscale's head of research.

Grayscale: Crypto Can Advance Without CLARITY Act, But US Risks Investment Exodus

Zach Pandl, Head of Research at Grayscale, delivered a two-part verdict on the legislation currently stalled in the Senate. The near-term outlook for the industry is stable. The longer-term cost of inaction is real.

"While the crypto ecosystem will not be immediately impacted if the Digital Asset Market Clarity Act does not pass, it could affect new investment activity in the U.S. as industry actors shift toward friendlier jurisdictions."
Zach Pandl, Head of Research at Grayscale

Senate Majority Leader John Thune filed cloture on the CLARITY Act on August 8, setting up a potential floor vote in September after Congress returns from summer recess. But Pandl is skeptical that timeline holds.

"Full passage looks unlikely in 2026, given the crowded Senate calendar and election-year politics."
Zach Pandl, Head of Research at Grayscale

That skepticism is well-grounded. The Senate has a packed legislative agenda heading into an election cycle, and crypto legislation, however significant to the industry, competes with appropriations battles, foreign policy priorities, and domestic spending debates. The CLARITY Act, which would establish a comprehensive market structure framework for digital assets by clarifying jurisdiction between the SEC and CFTC, has broad industry support but no guarantee of floor time.

The distinction Pandl draws between immediate impact and longer-term competitiveness is important. Bitcoin's store-of-value demand, according to Grayscale's research, stays steady even without new market structure legislation. Institutional holders are not going to dump BTC because a Senate vote slips to 2027. What does shift is the calculus for new entrants: founders deciding where to incorporate, venture funds deciding where to deploy, and exchanges deciding where to apply for licenses. Regulatory clarity is a competitive asset, and the US is not the only country offering it.

The EU's Markets in Crypto-Assets (MiCA) framework is already operational. Singapore, the UAE, and the UK have all moved to formalize crypto regulation in ways that attract business. A prolonged US legislative stall hands those jurisdictions a structural advantage.

The regulatory vacuum left by a failed CLARITY Act will not be entirely empty. The SEC and other agencies are expected to fill gaps through rulemaking, particularly on tokenized securities. That process is slower, less comprehensive, and more vulnerable to legal challenge than statute. Enforcement-driven regulation, the approach that defined the SEC's posture through much of the early 2020s, created prolonged uncertainty and costly litigation for the industry. Rulemaking is a step up from enforcement, but it is not a substitute for legislation that explicitly defines which assets are commodities, which are securities, and which agency has authority over each category.

That ambiguity has real costs. The Brazil Central Bank's recent mandate imposing a 24-hour delay on large crypto transfers abroad illustrates how quickly regulators in other markets move to assert control when legislative frameworks are absent, sometimes in ways that constrain rather than enable the industry.

US-listed crypto equities face a more immediate pressure. Stocks tied to companies whose business models depend on regulatory clarity, including exchanges, custody providers, and tokenization platforms, are expected to see elevated volatility as investors weigh the bill's odds. That is not a systemic risk, but it is a real one for portfolios with concentrated crypto equity exposure. The uncertainty premium gets priced in, and it does not disappear until there is either a vote or a credible alternative path forward.

The CLARITY Act has been years in the making. Its failure would not end crypto in America. Grayscale's own position as a major asset manager operating under existing legal frameworks demonstrates that the industry has found ways to operate and grow without comprehensive legislation. But operating around regulatory ambiguity is not the same as operating with a clear rulebook, and the difference matters most at the margin: for the next generation of projects, the next wave of institutional capital, and the next cohort of entrepreneurs deciding where to build. Those decisions accumulate over time, and their effects compound. Congress has until September to signal whether it intends to act.