Grayscale says CLARITY Act could unlock $30B in crypto inflows

Grayscale Investments likened the CLARITY Act to the spot Bitcoin ETF approval, calling it a potential turning point for institutional crypto adoption with XRP among the biggest beneficiaries.

The CLARITY Act, stalled in the US Senate with a 40.3% passage probability before the August recess, could unlock the next wave of institutional crypto adoption by providing a federal market structure framework, according to Grayscale Investments.

"The CLARITY Act represents a regulatory inflection point comparable to the spot Bitcoin ETF approval in 2024," the firm said in a July 25 analysis. "A clear federal framework would remove the legal uncertainty that has kept many institutional allocators on the sidelines."

The bill, which would draw jurisdictional lines between the SEC and CFTC and place most crypto assets outside SEC oversight, faces a 60-vote threshold in a Senate where Republicans hold a 52-47 majority. Senate Majority Leader John Thune said Thursday he does not expect the bill to clear before the August recess, though industry groups including the Digital Chamber and Blockchain Association are pressing leadership to begin floor consideration. Galaxy Research has trimmed its passage forecast, and Kalshi prediction markets peg the odds at 40.3%.

For XRP, which has been entangled in legal uncertainty since the SEC's 2020 lawsuit against Ripple Labs, the CLARITY Act's passage would remove a regulatory overhang that has limited institutional product development. Grayscale's endorsement signals that asset managers see the bill as a prerequisite for the next generation of crypto investment vehicles, including potential XRP ETFs.

Why Grayscale sees an ETF-like catalyst

Grayscale, which manages Bitcoin and Ethereum ETFs totaling billions in assets under management, has direct experience with how regulatory milestones drive capital inflows. The SEC's January 2024 approval of spot Bitcoin ETFs unleashed more than $30 billion in net inflows within 18 months, according to data from The Block. The firm's analysis positions the CLARITY Act as a similar structural catalyst — one that could expand the addressable market beyond Bitcoin and Ethereum to assets like XRP that currently lack clear regulatory status.

Fidelity, which manages roughly $7 trillion in assets, publicly urged the Senate to pass the bill on Friday, joining the Crypto Council for Innovation and the National Fraternal Order of Police in backing the legislation. "The time is now for clear rules of the road that are essential to strengthening investor confidence," Fidelity's public policy account said on X.

The ethics impasse and what comes next

The immediate obstacle is ethics language. Republicans released a 616-page updated draft this week that would bar federal officials, including the president, from issuing or sponsoring digital assets, with enforcement assigned solely to the Justice Department. Democrats whose votes are needed to reach the 60-vote threshold rejected the proposal. Senator Ruben Gallego, one of only two Democrats to back the bill in committee, called the GOP offer "not a serious effort" after months of bipartisan work.

Senator Thom Tillis conditioned his support on stronger guardrails against officials profiting from crypto, while roughly seven Democrats including Mark Warner and Catherine Cortez Masto say they cannot support the current draft, citing gaps on ethics and illicit finance. Bipartisan talks are expected to continue through the weekend.

If lawmakers cannot hold a vote before the Senate breaks in August, consideration could slip into the weeks before the 2026 US midterms, further complicating the bill's path. Orest Gavryliak, chief legal officer of DeFi platform 1inch, said the CLARITY Act would help recognize a framework for non-custodial protocols rather than "regulating with enforcement" — a distinction that matters for how tokens like XRP would be classified under the new regime.

This article is for informational purposes only and does not constitute investment advice.