Grayscale’s Zach Pandl: U.S. Crypto Can Thrive Even If the CLARITY Act Fails
As uncertainty grows around the fate of the CLARITY Act, Zach Pandl, Head of Research at Grayscale, argues that the U.S. crypto market is not dependent on this single piece of legislation to move forward. In his view, the digital asset ecosystem has already demonstrated that it can function and expand without a comprehensive, tailor‑made market-structure law in place.
Pandl bases his assessment on a simple observation: much of the crypto economy has operated for nearly 17 years under a patchwork of existing rules, guidance, and enforcement actions rather than under a unified regulatory framework. Despite that, core use cases such as stablecoins and Bitcoin have continued to grow, innovate, and attract capital.
From his perspective, the collapse of hopes for the CLARITY Act in 2026 would not trigger an immediate shock to the market. Stablecoins would still be used as payment instruments and settlement tools in both retail and institutional contexts. Bitcoin would remain widely treated as a digital store of value and macro asset, integrated into portfolios, payment rails, and financial products. Market infrastructure that already exists would not vanish simply because a bill failed to pass.
Pandl acknowledges that the CLARITY Act, if enacted, would provide something the U.S. currently lacks: a cohesive rulebook specifically designed for digital assets. That framework is meant to clarify how different types of tokens are classified, which agencies have jurisdiction over them, and what obligations issuers, exchanges, and intermediaries must follow. In theory, such clarity could reduce legal uncertainty, lower compliance costs, and unlock new forms of innovation.
However, he stresses that the absence of this law does not automatically equal paralysis. What it does create, he warns, is an environment where future innovation and investment decisions may be increasingly made outside U.S. borders. When projects, funds, and infrastructure providers cannot reliably predict how regulators will treat tokenized assets, they are more likely to launch or expand operations in jurisdictions that offer clearer guidelines.
This is where Pandl sees a crucial role for the U.S. Securities and Exchange Commission and other federal regulators. While Congress struggles to advance comprehensive legislation, regulatory agencies can still shape the environment through rulemaking, interpretive guidance, and approvals of new financial products. He points to steps the current administration has already taken in several key areas: institutional crypto custody, banking access for crypto-related businesses, staking services, and the approval of various crypto exchange-traded products.
According to Pandl, these incremental but tangible moves show that regulation need not be all-or-nothing. Even without the CLARITY Act, the industry can continue to develop under a regime gradually refined through rules and decisions by agencies like the SEC, the Commodity Futures Trading Commission, and banking regulators. He summarizes this position with a clear statement: crypto will advance with or without the CLARITY Act, supported by the rulemaking efforts that are expected from these bodies.
Yet he also issues a warning. In the absence of broad market-structure rules, the United States risks losing its edge in attracting fresh capital and entrepreneurial activity. If token classification remains ambiguous, if the process for issuing new tokenized assets stays opaque, and if compliance expectations for crypto platforms are not made predictable, then the path of least resistance for innovators may lead them to friendlier regulatory climates abroad. In Pandl’s view, a larger share of new crypto investment is therefore likely to flow overseas if the status quo persists.
The market’s skepticism about the CLARITY Act’s future is visible in betting markets, where the probability of the bill’s approval by 2026 has fallen sharply to about 21%, a drop of 44%. This shift reflects fading confidence that Congress can overcome its internal divisions in time to pass a meaningful framework for digital assets.
Patrick Witt, Executive Director of the President’s Council of Advisors for Digital Assets, is far less forgiving of the legislative delays. He argues that lawmakers have had more than enough time to negotiate the substance of the CLARITY Act. In his reading, the continued holdups are less about technical drafting challenges and more about political maneuvering and partisan positioning.
The latest setback came when a group of pro-crypto Democrats, including Senate Minority Leader Chuck Schumer, chose to request more time for negotiations instead of allowing a procedural vote before the August recess. That decision effectively pushed the debate further into the future and narrowed the window for meaningful action before the current legislative session winds down.
Witt warns that if Congress cannot bridge its divides and act by mid-September, the opportunity may be lost for good in this cycle. He frames the situation starkly: failure to reach agreement by September 15 would likely signal that lawmakers will not get there at all, at least within the current political environment. In that case, the burden of shaping U.S. crypto policy would fall even more heavily on regulators rather than elected officials.
From the perspective of businesses and investors, this tug-of-war between legislation and regulation creates a mixed picture. On one hand, they are already operating under securities laws, commodity rules, banking standards, and enforcement approaches that give some sense of the boundaries. On the other hand, the lack of a unified framework means that every new product or token type can become a case-by-case legal puzzle, making long-term planning and large-scale capital commitments more difficult.
The CLARITY Act was intended to resolve some of these recurrent questions: when a token is a security versus a commodity, how tokenization of real-world assets should be supervised, what disclosure regimes are appropriate for decentralized networks, and how secondary trading venues should be licensed. Without such statutory guardrails, market participants must continue to interpret existing laws that were never designed with blockchain-based assets in mind.
Still, Pandl’s outlook underscores a key reality: crypto is a global, software-driven phenomenon that does not wait for any single legislature. Developers can deploy protocols from virtually anywhere. Capital can move across borders in seconds. Users can access decentralized applications without regard to national boundaries. As a result, even a stalemate in Washington cannot halt the underlying technological and economic momentum.
Instead, the consequences of inaction are likely to be competitive rather than existential. Countries that establish pragmatic, predictable rules may capture a growing share of tokenization, blockchain infrastructure, and digital asset finance. Those that fall behind may still see consumer use and trading activity but lose leadership in high-value segments like institutional finance, enterprise blockchain solutions, and regulated token markets.
For U.S. policymakers, the challenge is therefore not about whether crypto continues to exist, but about where the center of gravity for innovation and investment will be. Pandl’s argument suggests a middle path: even absent sweeping legislation, regulators can sharpen and modernize existing rules to offer more clarity, while Congress continues wrestling with bigger structural questions. That approach may not deliver the neat, comprehensive framework the CLARITY Act’s supporters envisioned, but it can still reduce uncertainty at the margins.
Investors and builders, in turn, may need to adapt to a dual-track reality. In the short term, they can rely on signals from SEC enforcement actions, guidance on custody and disclosure, bank supervisory letters, and product approvals to gauge what is acceptable. Over the longer term, they must monitor whether Congress eventually converges on a more unified approach, or whether the U.S. permanently settles into a more fragmented, agency-led regulatory landscape.
In practice, this environment places a premium on robust compliance, flexible corporate structures, and jurisdictional diversification. Projects that can operate within U.S. constraints while also leveraging friendlier rules abroad will likely be better positioned than those that depend entirely on a single regulatory outcome such as the passage of the CLARITY Act.
Ultimately, the debate surrounding the CLARITY Act reveals a deeper tension between the pace of technological change and the speed of legal adaptation. Crypto has evolved rapidly over nearly two decades, while the U.S. regulatory system, built on laws from the mid-20th century and earlier, has struggled to keep up. Pandl’s message is that this mismatch, while inconvenient and costly, is not fatal to the industry. Crypto will keep advancing, guided by a combination of existing law, evolving rulemaking, and global competition-even if the long-promised legislative clarity never fully materializes.