The Clarity Act Could Unleash Trillions Into Bitcoin: The Math Is Brutal

The Clarity Act, formally known as the Digital Asset Market Structure Clarity Act (H.R. 3633), passed the U.S. House in July 2025 with the goal of ending the regulatory gray zone around crypto. The bill splits oversight between the SEC and the CFTC, classifying securities-like tokens under the SEC and decentralized digital commodities like Bitcoin under the CFTC.

As of February 2026, the legislation has stalled in the Senate amid industry concerns and political delays. But if it passes, the structural impact on Bitcoin could be big.

A closed-door meeting at the White House yesterday (reported by CoinGape) focused on resolving a key dispute that has stalled progress on the CLARITY Act. The tension centers on whether digital dollars like USDC should be allowed to offer yield. Major banks are pushing for a ban on yield-bearing stablecoins, arguing they could drain deposits from the traditional banking system. Crypto firms, on the other hand, maintain that yield is essential for innovation and competitive digital financial products.

What The Clarity Act Actually Does

At its core, the bill attempts to end classification confusion. It establishes formal definitions for blockchain systems, digital assets, and digital commodities. More importantly, it creates a regulatory path for tokens that begin as SEC-regulated “investment contracts” to transition into CFTC-regulated commodities if they sufficiently decentralize over time.

For exchanges and brokers, digital commodity trading would fall under CFTC registration. The bill also enables projects to raise up to $75 million annually without full SEC registration during decentralization phases.

For Bitcoin, the implications are pretty straightforward. As a sufficiently decentralized network, BTC would clearly fall under CFTC spot market oversight rather than securities law. That clarity removes one of the biggest barriers facing institutional allocators today: regulatory uncertainty.

The bill also explicitly protects self-custody and positions the U.S. as a competitive jurisdiction for digital asset innovation. Critics argue it could weaken SEC investor protections and open the door to more speculative excess. Supporters say it simply modernizes outdated frameworks.

Either way, legal clarity changes capital flows.

Kristen’s Supply-and-Demand Math

A relatively lesser-known capital investor on X, Kristen, laid out the implications in a viral thread that framed the opportunity in simple supply-and-demand terms.

Her argument is not that institutions want Bitcoin. It’s that many institutions legally cannot buy Bitcoin today due to mandate restrictions, fiduciary constraints, and unclear classification risk.

If The Clarity Act passes, that barrier drops.

She highlighted the scale of capital pools that could theoretically gain compliance clearance:

• $40 trillion in U.S. pensions
• $30 trillion in corporate and institutional treasuries
• $7 trillion in insurance capital
• $11 trillion in sovereign wealth funds
• $10 trillion in 401(k) and retirement plans
• $100 trillion in RIA-managed assets

Even conservative allocations matter.

If pensions and RIAs alone allocated just 1%, that’s 1% of $140 trillion, or $1.4 trillion in potential demand.

Now layer that against supply.

Bitcoin’s free-floating supply on exchanges sits well under 2 million coins. Even if one assumes a more generous 4 million liquid float, the math remains aggressive.

$1.4 trillion divided across 2 million BTC implies a $700,000 price per coin.
At 4 million BTC, that still implies $350,000.
If allocations rise toward 2–3% over time, the implied price quickly enters the $1,000,000+ range.

This isn’t narrative-driven speculation. It’s basic liquidity math. A small percentage shift in massive capital pools colliding with a structurally scarce asset.

Read also: Why Bitcoin (BTC) and Crypto Prices Are Falling Again

The Real Question

The key variable is not whether the math works. It does.

The question is whether The Clarity Act clears the Senate and whether institutions actually deploy capital once the green light appears. Institutions move slowly. Allocations scale gradually. Risk committees don’t flip switches overnight.

But structural clarity tends to change portfolio models over time.

Bitcoin today operates in a semi-regulated gray zone. If that changes (and BTC formally falls under defined CFTC commodity rules) the asset moves from speculative exposure to compliant allocation candidate.

That change alone could affect demand curves.

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