No CLARITY Act, No Problem? Grayscale Explains Crypto’s Plan B

The CLARITY Act got stuck in political limbo at the end of the business week until lawmakers return from their August recess, and Grayscale laid out a potential plan ahead for the US crypto industry if Congress ultimately fails to deliver the highly anticipated market structure this year.

There’s no need to sugarcoat it: it would be a setback at first, but the company sees a path forward.

Crypto Will Survive

Grayscale has weighed in on several occasions on the bill’s potential, and its latest analysis admitted that an agreement this year still remains technically possible. However, the reality of the Senate calendar and the upcoming midterm elections have made official passage increasingly difficult.

Their report comes just as Senate Majority Leader John Thune filed cloture on the motion to proceed with the legislation before lawmakers left Washington last week. The procedural vote is scheduled for September 15 but still requires 60 votes. Importantly, it’s not a final vote on the bill, just to determine whether senators can advance toward formally considering it.

If they fail to do so, Grayscale argued that Washington has several other avenues to move crypto regulation forward even without comprehensive legislation from Congress. Perhaps the most significant path is the regulatory agencies themselves.

The CFTC and SEC have already become considerably more accommodating toward the crypto industry compared to previous years, as they can continue developing rules and interpretations governing the market even if Congress remains on the sidelines.

Nevertheless, these watchdogs are still limited in what they can accomplish without new legislation, particularly when it comes to establishing permanent jurisdictional boundaries between themselves. Yet, they can still address some major points of inflection within the industry, such as tokenized securities, custody, and trading.

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On the plus side, institutional involvement has skyrocketed over the past few years through spot ETFs, stablecoins, tokenized RWAs, and growing Wall Street participation even as the CLARITY Act lingers. The GENIUS Act already provided a federal framework for payment stablecoins, which was a major win, added Grayscale’s Head of Research, Zach Pandl.

Odds Keep Slipping

The bill’s stagnation at the end of the business week was a blow for the industry, but Thune’s cloture brought some hope. However, several key issues remain, such as ethical disagreements, illicit finance rules, and language from the Senate Agriculture Committee.

Republicans don’t have enough votes to proceed alone, even if they all support the bill, as they need at least seven Democrats or independents. These difficulties, without a clear resolution in sight, have harmed expectations for passage this year, with Galaxy Research cutting the probability from 50% to just 30%.