Blockchain Adoption Advances Despite Uncertainty in U.S. Regulations

Blockchain adoption is on the rise in institutional finance, even as the U.S. struggles with regulatory clarity, according to a recent analyst report from Clear Street.

Key Takeaways

Blockchain adoption is increasing in institutional finance despite unclear U.S. regulations.
The proposed Clarity Act faces delays, potentially slowing the domestic crypto market.
Regulatory concerns may limit stablecoin benefits, favoring traditional banks.
Major financial institutions are engaging with blockchain products, showing resilience in adoption.
Recent updates reflect adjustments in outlooks and price targets for crypto-related companies, while long-term drivers for stablecoin growth remain strong.

What Is Blockchain Technology

The firm suggests that while delays surrounding the proposed Clarity Act may slow certain areas of the domestic crypto market, they have not halted broader engagement with tokenization, stablecoins, and on-chain financial infrastructure.

The Senate Banking Committee has postponed a planned review of the Clarity Act following objections from Coinbase. Although the Senate Agriculture Committee is still set to evaluate the bill on January 27, Clear Street analyst Owen Lau cautions that the timeline for the legislation could extend to March or beyond.

Concerns About Stablecoin Competition

In comments referenced by Clear Street, Coinbase CEO Brian Armstrong expressed various concerns regarding the draft legislation, particularly the risk that bank lobbying might restrict crypto exchanges from passing stablecoin rewards on to users.

Clear Street believes such restrictions are likely unless limited to narrowly defined reward systems, including payments, loyalty programs, wallets, or staking activities.

The firm argues that these limitations would disadvantage the competitive landscape, favoring traditional banks by allowing them to retain interest spreads while diminishing the consumer benefits associated with stablecoins.

"In our view, the bill risks shifting away from its original intention of fostering crypto innovation to instead protecting bank profits and limiting competition," Lau stated.

Clear Street identifies two potential paths for the crypto sector: either accepting unfavorable legislation or withdrawing from the legislative process altogether. Either scenario could impede U.S. blockchain adoption and lessen the global competitiveness of U.S.-based stablecoins.

Continued Institutional Momentum Without Regulatory Framework

Despite these regulatory challenges, Clear Street emphasizes that blockchain adoption is progressing even in the absence of a thorough U.S. market structure policy.

Notable financial institutions such as Vanguard, Charles Schwab, Bank of America, Morgan Stanley, JP Morgan Chase, and Bermuda-based companies have all increased their involvement with blockchain products and infrastructures.

Areas of growth highlighted include tokenized money market funds, tokenized equities, and prediction markets. Clear Street noted that while positive policy conditions would likely accelerate adoption, institutional participation has held strong without favorable legislation.

Updates on Crypto-Linked Companies

In light of regulatory uncertainty and shifting market conditions, Clear Street has revised its forecasts and price targets for several companies linked to cryptocurrency.

For Bakkt (BLSH), the firm raised its adjusted EBITDA estimate for Q4 2025 to $37.8 million, up from $35.5 million, due to higher-than-expected transaction revenue. Estimates for full-year 2026 and 2027 adjusted EBITDA were also slightly increased because of ongoing strength in subscription and service revenue. However, Clear Street lowered its price target to $50 from $57 while maintaining a Buy rating.

Regarding Coinbase, Clear Street decreased its Q4 2025 adjusted EBITDA estimate to $630 million from $748 million in light of disappointing December trading volumes. Although consensus estimates of $731 million appear optimistic, the firm asserts that the long-term outlook for blockchain adoption remains sound. Coinbase's price target was also reduced to $344 from $415 due to lower earnings expectations and a more compressed industry valuation multiple, with the Buy rating unchanged.

Stablecoin Growth Remains Strong

Clear Street also adjusted its forecast for Circle (CRCL), lowering its adjusted EBITDA estimate for Q4 2025 to $112 million from $116 million, attributed to a lower-than-expected average market capitalization for USDC. The firm estimates that USDC's market cap grew by 72% year-over-year and 2% quarter-over-quarter during this time.

While short-term estimates were adjusted downward, Clear Street believes that long-term drivers for adoption—including prediction markets, tokenization, artificial intelligence applications, and cross-border payments—remain positive. The firm also mentioned potential growth from non-core income streams. Circle's price target was revised down to $85 from $110, with a Hold rating maintained.

Conclusion

Clear Street concludes that while regulatory delays and political compromises may dampen sentiment in the short term, blockchain adoption is increasingly propelled by institutional demand rather than just legislative momentum.

"Institutional use cases continue to grow even without a favorable Clarity Act," the firm stated, asserting that while clearer policies would enhance adoption, the current lack of them has not hindered progress.