Delayed Clarity Act Leads to $952 Million in Crypto Fund Outflows: CoinShares

Summary:
Recent delays in the Digital Asset Market Clarity Act have adversely affected the cryptocurrency market, leading to significant fund outflows totaling $952 million. With investor confidence shaken, particularly in Ethereum and Bitcoin funds, this marks the first decline in four weeks.

Key Takeaways

A total of $952 million was withdrawn from crypto investment products, the first decline in four weeks.
Ether funds experienced the largest outflows at $555 million, while Bitcoin saw $460 million in withdrawals.
The delays in the Clarity Act contributed to this decline, adding to regulatory uncertainty.
Most outflows ($990 million) originated from the United States.
Despite the situation, some traders remain optimistic about Ether's future.

Delays Related to Clarity Act Cause $952 Million in Crypto Fund Outflows: CoinShares

Market Reactions to the Clarity Act Delays

The cryptocurrency sector experienced $952 million in outflows, marking a troubling trend for investors as sentiment dipped due to postponed progress on a crucial US regulatory bill. This was the first decline in four weeks for crypto investment products.

Outflows by Investment Types

In detail, crypto exchange-traded products (ETPs) recorded these substantial fund withdrawals, with Ether funds leading the way at $555 million, followed closely by Bitcoin funds, which saw outflows of $460 million. The CoinShares report released on Monday attributed these large-scale outflows largely to delays in the Digital Asset Market Clarity Act—often referred to as the Clarity Act. This has resulted in ongoing regulatory uncertainty and increased concerns about selling pressure from large investors (commonly referred to as "whales").

"The data suggests that it’s unlikely ETPs will surpass last year's inflows this year," stated CoinShares, noting that total assets under management currently stand at $46.7 billion, down from $48.7 billion in 2024. Notably, a significant $990 million of these outflows came from US investors, with only modest offsets from Canada ($46 million) and Germany ($15.6 million).

Crypto Fund Flows by Country (USD Million). Source: coinshares.com

Insight from Analysts

On Thursday, David Sacks, the White House AI and crypto expert, indicated that the Senate's markup of the eagerly awaited Clarity Act is now scheduled for January 2026. This is a delay from prior expectations of having the bill reach President Trump’s office before the end of 2025.

"We are closer than ever to enacting important cryptocurrency market legislation that President Trump has called for. We look forward to finishing the job in January," Sacks mentioned in a post on X.

According to CoinShares' head of research, James Butterfill, the sinking investor sentiment is directly linked to the bill's delays. "Ethereum, in particular, experienced a staggering outflow of $555 million, which is significant considering the potential impact the Clarity Act holds for it," he noted.

Crypto Fund Flows by Assets. Source: coinshares.com

Future Outlook Despite Challenges

The Clarity Act aims to clarify which digital assets are securities and which are commodities, determining the authority of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) on digital assets.

Despite the legislative delays, some of the most successful traders in the cryptocurrency market—termed "smart money" traders—remain committed to their positions. According to data from Nansen, these traders are still betting on a short-term price increase for Ether, demonstrating resilience amid market uncertainty.

Smart Money Traders’ Positioning on Perpetual Futures. Source: Nansen

Smart money traders hold net long positions on Ether totaling $476 million and possess net short positions on Bitcoin worth $109 million, reflecting a mixed outlook in a market grappling with regulatory issues.

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