Wall Street Warns: US Crypto Policy Clouds the Market

Benchmark, an influential Wall Street brokerage, is warning that the digital asset sector may soon run into its limits as US crypto policy uncertainty drags on. Without meaningful legislation from Congress in 2024, analysts believe the market’s growth and institutional appeal could freeze in place. The core issue: crypto still lacks a clear, durable rulebook in the United States. Analyst Mark Palmer emphasized in the report that the absence of defined market laws creates lasting structural risks for U.S.-connected platforms. These risks suppress broader asset prices, inflate investor caution, and funnel capital into only the most predictable corners of the ecosystem.

According to Palmer, the situation slows the natural maturation process of the crypto asset class. Until policymakers draw clear lines, investors skew toward defensive strategies—favoring Bitcoin, companies with fortified balance sheets, and crypto infrastructure firms that generate steady revenue. Meanwhile, higher-volatility areas—crypto exchanges, alternative tokens, and decentralized finance—remain under pressure as their fates hinge more dramatically on future rules. The report singles out decentralized finance and smart contract networks as the most exposed sectors. Their business models rely heavily on regulatory clarity, interoperability, and investor confidence—three things that become shaky under US crypto policy uncertainty. In contrast, assets that are simpler to define—like Bitcoin—or sectors tied to physical infrastructure, such as energy-backed miners, are seen as carrying far less legal ambiguity.

At the heart of the legislative debate lies a bill that would determine how digital tokens are classified. Its passage would clarify whether crypto assets fall under the jurisdiction of commodity law or securities law, while also mapping out the roles of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Such definitions are vital for compliance, market fairness, and onboarding institutional money.

Despite the slow political tempo, Palmer maintains a cautiously optimistic outlook. He argues that Congress is likely to pass some version of the bill—though not necessarily quickly. Even an imperfect law would reduce regulatory fog, shrink rule-based risk premiums, and make the U.S. more competitive with foreign jurisdictions that are already moving ahead. Reduced US crypto policy uncertainty could unlock participation from pension funds, sovereign wealth investors, and other heavyweight institutions that have been reluctant to engage with crypto under current conditions.

In Palmer’s view, the situation carries a clear message: without legislative action, the American crypto sector may struggle to scale beyond its current ceiling. But with the right framework, it could transition from a speculative frontier into a fully regulated financial market with room for long-term institutional growth.

Disclaimer: CryptopianNews shares this for learning and info only. It’s not meant to be financial or investment advice. Crypto markets change a lot and move quickly. Investing in them can be risky. You should always look into things yourself. Talk to a trained financial advisor before making any choices about investing.