Galaxy Digital cut its estimated probability of the CLARITY Act passing in 2026 to 10%, citing a narrow legislative window and unresolved political disagreements. Kraken parent Payward reported a 17% year-over-year increase in second-quarter adjusted revenue to $508 million despite a 13% decline in transaction volume, highlighting the growing contribution of non-trading businesses. Morgan Stanley also increased its exposure to Bitcoin funds, raising its holdings of BlackRock’s iShares Bitcoin Trust ETF by 23% to approximately 16.5 million shares.
Galaxy Lowers CLARITY Act Passage Odds to 10%
Galaxy Digital has sharply reduced its estimate for the likelihood that the Digital Asset Market Clarity Act will pass in 2026, lowering its probability to just 10%.
Galaxy head of firmwide research Alex Thorn said lawmakers face a compressed legislative timetable when the Senate returns on Sept. 14. The chamber may have only two to three weeks to address the legislation, and Thorn warned that the bill would need to dominate much of the Senate’s remaining working session to have a realistic chance of passing.
Several unresolved issues continue to complicate negotiations, including proposed ethics rules governing government officials’ involvement in crypto and disagreements with the banking industry over stablecoin yield provisions.
Galaxy has progressively reduced its expectations for the legislation. Its probability estimate fell from 75% on May 22 to 60% on June 6, then to 50% on June 26, before reaching 10% in its latest assessment.
The CLARITY Act is intended to establish a federal regulatory framework for digital assets and clarify the respective responsibilities of the Securities and Exchange Commission and Commodity Futures Trading Commission. Although the legislation cleared the Senate Banking Committee in May, opposition from Democrats and banking groups has complicated its path forward.
Payward Revenue Rises as Kraken Diversifies Beyond Trading
Kraken parent Payward generated $508 million in adjusted revenue during the second quarter, representing a 17% increase from the same period a year earlier.
The increase came despite a decline in trading activity. Total transaction volume fell 13% to $310 billion, while Payward reported $23 million in adjusted EBITDA.
The company’s revenue mix continued to shift toward businesses beyond traditional crypto trading. Asset-based and other businesses accounted for 60% of quarterly revenue, compared with 55% a year earlier.
Growth in traditional futures, equities and tokenized equities helped offset weaker crypto spot activity. Funded accounts also increased 42% to 6.6 million, while Kraken increased its share of the spot market for the third consecutive quarter.
The results underscore Kraken’s broader strategy of becoming a multi-asset financial platform rather than relying primarily on cryptocurrency trading fees.
The company has expanded into stocks, tokenized assets, pre-IPO products and futures while pursuing acquisitions including NinjaTrader and Bitnomial. It has also announced plans to acquire Magic Labs’ wallet infrastructure business.
Morgan Stanley Raises BlackRock Bitcoin ETF Holdings
Morgan Stanley increased its exposure to Bitcoin-related investment products during the second quarter, with its position in BlackRock’s iShares Bitcoin Trust ETF emerging as one of the largest changes in its reported crypto holdings.
The investment bank’s holdings of BlackRock’s IBIT increased 23% to approximately 16.5 million shares, up from 13.4 million shares in the first quarter, according to its Q2 13F filing with the US Securities and Exchange Commission.
Morgan Stanley also reported holding approximately 2.57 million shares of its own Morgan Stanley Bitcoin Trust, valued at roughly $43.3 million.
The firm’s increased Bitcoin ETF exposure comes as institutional participation in spot Bitcoin products continues to develop, with large financial institutions using regulated exchange-traded vehicles to gain exposure to the asset without directly managing Bitcoin custody.
The filing also showed changes across other crypto-related investments, including reduced holdings in Coinbase and certain other digital asset-linked companies.
Institutional Demand Meets Regulatory Uncertainty
The latest developments present a mixed picture for the cryptocurrency market.
On one side, institutional adoption continues to expand through regulated investment products and increasingly diversified financial platforms. Morgan Stanley’s larger IBIT position illustrates the continued participation of major financial institutions, while Payward’s results show that crypto companies are expanding into traditional financial products to diversify revenue.
On the regulatory side, however, the sharp reduction in Galaxy’s CLARITY Act probability highlights the uncertainty surrounding the US legislative environment.
The contrast could become increasingly important for the digital asset industry. Institutional investors may continue increasing exposure through existing regulated products even if broader market-structure legislation remains delayed, while crypto companies continue building businesses around equities, futures, tokenization and other financial services.
Closing Insights
Crypto markets are increasingly being shaped by two parallel developments: institutional adoption is becoming more deeply integrated into traditional financial markets, while regulatory progress remains uneven. Galaxy’s 10% probability estimate for CLARITY passage highlights the difficulty of achieving bipartisan agreement within a limited legislative window, but Morgan Stanley’s increased Bitcoin ETF exposure demonstrates that institutional demand does not necessarily depend on the passage of new crypto legislation. At the same time, Payward’s expanding contribution from non-trading businesses suggests that the next phase of crypto’s financial evolution may depend less on pure trading activity and more on the integration of digital assets with broader financial services.
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