Regardless of whether the Clarity Act passes, Wall Street’s crypto expansion is unlikely to halt

The Digital Asset Market Clarity Act (CLARITY) could provide banks, brokers, and asset managers with a clearer regulatory framework, but financial institutions have already made significant strides in digital assets, meaning failure may only slow adoption rather than stop it entirely.

• The Senate is poised to vote on the Clarity Act Tuesday, which could grant financial firms greater clarity on trading digital assets and developing crypto products.
• Wall Street’s crypto expansion is expected to continue irrespective of the outcome.
• The legislation aims to clarify regulatory authority over digital assets, though disputes persist regarding stablecoin rewards and their potential to divert deposits from traditional banks.

Wall Street may finally receive a clearer crypto regulatory framework it has been awaiting for years when Washington enacts a market structure bill on Tuesday. However, even if it doesn’t, financial institutions are unlikely to cease building in the digital assets sector.

The Senate’s anticipated vote on the Digital Asset Market Clarity Act (CLARITY) could provide banks, brokers, and asset managers with greater certainty about how to trade and develop products involving digital assets. While successful passage could accelerate these efforts and attract more traditional firms to the market, failure may prove less of an obstacle than it once would have been.

«It would be immensely helpful and beneficial for Wall Street’s adoption of the technology, but it is by no means a necessary prerequisite,» said Chris Crawford, a digital-assets partner at law firm Fenwick.

Traditional financial firms have already ventured into crypto through exchange-traded funds, tokenization platforms, and other digital-asset products despite years of uncertainty regarding how securities and commodities laws apply. CLARITY could make these decisions easier, but it would not be starting Wall Street’s adoption from scratch.

Crawford noted that the bill could provide firms with clearer boundaries regarding which digital assets qualify as commodities and how they can be traded. Defining this perimeter could also give firms greater certainty about what constitutes a digital security when brokers and trading platforms handle these assets.

«You would essentially have much simpler internal processes, at any organization that handles crypto in whatever form, to understand what regulatory framework applies to them,» Crawford said.

Wall Street is already moving forward

So what unfolds if the Clarity Act doesn’t secure the vote it needs on Tuesday?

Brian Vieten, senior research analyst at Siebert Financial, stated that passage could effectively give U.S. financial firms a «green light» to accelerate blockchain investment, launch tokenized products, and pursue acquisitions to establish a foothold in digital assets.

However, failure could create a counterintuitive incentive: move faster.

«We believe U.S. firms already have an economic incentive to accelerate product launches and tokenization activity into 2027-28 while the current favorable regulatory environment persists,» Vieten said. «In that scenario, failure to pass CLARITY could actually pull some activity forward rather than eliminate it.»

«Either way, we believe Wall Street’s buildout of digital asset infrastructure continues,» he added.

The concept is that firms already perceive commercial opportunities in tokenization and digital assets. If Congress fails to codify the new regulatory direction into law, some companies may prefer to launch products while the current near-term environment remains relatively favorable rather than wait for a future administration or regulator to shift course.

For example, the SEC and CFTC are already proceeding with drafting rules for the digital assets sector designed to assist institutions, even if lawmakers cannot deliver on the Clarity Act.

Robinhood, which has aggressively expanded into crypto and tokenized securities, stated it supports the legislation and is pushing for bipartisan backing.

«Robinhood has long advocated for clear regulatory guidelines for digital assets, ensuring innovation can flourish while appropriate consumer protections remain intact,» said Michael Ahern, vice president of U.S. government affairs at Robinhood Markets. «The Clarity Act is a positive step forward, and we will continue to encourage bipartisan support in the U.S. Senate.»

The bill’s path to passage, however, remains politically challenging.

For tomorrow’s vote, the legislation will need a substantial number of Democrats to vote yes if it is to overcome the Senate’s 60-vote threshold. The ethics provision, which bars the U.S. President and other senior government officials from conducting business in the digital assets sector, was also one of the major outstanding issues preventing the bill’s passage. However, Trump has agreed to most of the ethics provisions in the new text released on Sunday.

Then there are other issues. A significant one is how regulatory authority over crypto is divided and how digital commodities can be traded. The bill has also faced disputes over stablecoin rewards, with banking groups pressing lawmakers for tighter restrictions over concerns that interest-like payments could draw deposits away from banks. Eight banking trade groups reiterated those concerns in a letter to Senate leaders on Monday.

Institutions have already crossed the line

For professional investors, meanwhile, the vote may have even less immediate impact.

«It matters, but not that much to the individual professional investor or these large platforms that have model portfolios where they’ve already added bitcoin,» said Ryan Rasmussen, research analyst at Bitwise.

Investors have frequently asked Bitwise about CLARITY over the past three months, Rasmussen said, but uncertainty over the bill has not become the main factor preventing them from allocating to crypto.

«They’re not going to remove it from their portfolios because CLARITY doesn’t pass,» he said.

That reflects a broader shift in institutional crypto adoption.

Spot bitcoin ETFs opened another route into the asset for professional investors in 2024, while large financial firms have continued expanding their digital-asset businesses.

Crawford said failure could temporarily preserve an advantage for crypto-native companies accustomed to operating in regulatory gray areas. But he doesn’t expect that advantage to last.

Eventually, he said, Wall Street «catches up.»