Analysts see clarity act crypto as key to unlocking trillions in sidelined institutional capital

Analysts argue that the long-debated clarity act crypto legislation could unleash a historic wave of institutional capital into digital assets once it finally clears Congress.

Regulatory clarity and trillions in sidelined capital

Although final passage of the CLARITY Act, widely known as the US crypto market structure bill, has been delayed in Congress, expectations around its impact remain high. According to several market commentators, its eventual approval could spark an unprecedented inflow of institutional funds into the broader crypto sector.

In a recent post on X (formerly Twitter), the trader and analyst known as 360Trader claimed that trillions of dollars in institutional money are essentially parked on the sidelines. However, he argued that these investors are mostly waiting for robust crypto regulatory clarity before committing in size to digital assets.

According to his assessment, the CLARITY Act could become the trigger that opens Wall Street’s doors to crypto in a far more meaningful way. Moreover, he suggested this process could ultimately drive more than $5 trillion into the ecosystem over time, as regulatory and compliance barriers are reduced.

To support this thesis, 360Trader highlighted remarks from White House Digital Asset adviser Patrick Witt. Witt has stated that trillions in institutional capital remain effectively sidelined, with major firms unwilling to scale exposure before they receive clear, durable legal guidance on how digital assets are treated in the United States.

Large asset managers, including BlackRock, are often cited as examples of institutions constrained by the current patchwork regulatory framework. That said, many of these firms have already taken initial steps into the space via exchange-traded products and tokenization pilots, while still limiting broader risk.

If the CLARITY Act ultimately becomes law, 360Trader believes that overall crypto market capitalization could climb beyond $4 trillion. He compared the potential rally to the powerful move that followed the approval of spot Bitcoin exchange-traded funds (ETFs) back in 2024, when fresh institutional money began to flow into regulated products.

Stablecoins, banks and a new wave of demand

Stablecoins represent another central pillar of the debate around the CLARITY framework. Under the proposed rules, banks would receive clearer authorization to issue their own stablecoins, subject to prudential oversight. However, this added clarity could also intensify competition between traditional lenders and crypto-native issuers.

The stablecoin market has already grown sharply, with supply reportedly reaching about $300 billion in 2025. Over the same period, these tokens processed approximately $33 trillion in transaction volume. Remarkably, that throughput already exceeds the total payment volume running across the Visa network, underscoring how central stablecoins have become to on-chain activity.

The possibility that major banks such as JPMorgan could launch fully integrated stablecoins backed by substantial payment flows has been described as a potential turning point. Moreover, bank-issued tokens with embedded compliance and settlement rails might accelerate mainstream adoption among corporate treasurers and large asset managers.

The yield component of the stablecoin thesis is also drawing attention from investors. Some stablecoin products currently advertise returns in the range of 3% to 5%, particularly when deployed into short-duration assets or money market-like structures. By contrast, traditional savings accounts in the United States still average roughly 0.07%, a gap that could become increasingly difficult for depositors to ignore.

360Trader suggested that this yield disparity could trigger a major reallocation of capital away from low-interest deposits. In his view, as much as $6 trillion could migrate from conventional bank accounts into crypto-linked instruments, including tokenized cash products and regulated stablecoin offerings that deliver higher returns.

Institutional adoption, DeFi rails and political delays

The analyst also argued that a comprehensive clarity act crypto framework would likely accelerate institutional adoption of decentralized finance infrastructure. In parallel, traditional financial institutions may start integrating DeFi-style settlement layers to enable faster clearing, programmable payments and more efficient cross-border transaction rails.

However, the traditional banking sector has repeatedly pushed back against higher-yield stablecoin structures, warning about potential outflows from their deposit bases. Banks contend that aggressive yield offerings could erode core funding and pressure margins, especially if they scale rapidly among retail and corporate clients.

This tension has contributed to the current legislative delay, as policymakers weigh the benefits of innovation against the risks to financial stability. Moreover, ongoing White House meetings with industry representatives and regulators continue to shape the final contours of the bill, including how bank issuance and custody models will be supervised.

Summarizing his stance, 360Trader wrote that he is “bullish on CLARITY unlocking trillions in dormant capital” and sees the legislation as a potential catalyst for the next major cycle. In his view, the clarity act crypto package could separate the forthcoming bull run from anything the market has witnessed before, by firmly anchoring institutional participation.

Market snapshot and outlook

For now, market data show that the total crypto market cap has retreated, reflecting a more cautious risk environment while lawmakers negotiate. The daily chart indicates a drop to around $2.2 trillion as of Tuesday, according to the TOTAL index on TradingView.com, after prior attempts to break higher stalled.

That said, advocates argue that price action may be masking the scale of dormant demand. As regulatory negotiations progress in 2025, investors will be watching closely for any formal timeline on when will the crypto clarity act be passed, since many believe a definitive vote could mark the starting gun for the next phase of institutional inflows.

In summary, the CLARITY Act debate has become a focal point for the future of digital assets in the United States. While timelines remain uncertain, many analysts see comprehensive rules on market structure, stablecoins and institutional access as the missing piece before trillions in sidelined capital are finally deployed into crypto.