Goldman Sachs sees regulation driving next wave of institutional crypto adoption

Core Insights - Goldman Sachs highlights an improving regulatory environment and the emergence of new crypto use cases as positive factors for the industry, particularly for infrastructure companies that are less affected by market cycles [1][2] - Regulatory uncertainty is identified as the primary barrier for institutional adoption, but this landscape is changing rapidly [1][2] Regulatory Developments - The SEC's leadership change under President Trump led to a reduction in aggressive enforcement actions against the crypto industry, with the SEC dropping nearly all pending cases [3] - Trump's administration prioritized the promotion of the U.S. crypto industry, a stance echoed by SEC Chair Paul Atkins, who aims to clarify regulations surrounding tokenized assets and DeFi projects [4] Legislative Outlook - Upcoming U.S. market structure legislation is expected to be a significant catalyst for institutional crypto adoption, with draft bills in Congress aiming to define the roles of the SEC and CFTC [4][5] - The passage of these bills in the first half of 2026 is deemed crucial, especially with potential delays due to the U.S. midterm elections later that year [5] Institutional Adoption - A survey indicates that 35% of institutions view regulatory uncertainty as the biggest hurdle to crypto adoption, while 32% see regulatory clarity as the main catalyst [5] - Currently, institutional asset managers have allocated about 7% of their assets to crypto, with 71% planning to increase their exposure in the next 12 months, indicating significant growth potential [6] Market Trends - Adoption of crypto has accelerated through vehicles like exchange-traded funds (ETFs), with Bitcoin ETFs reaching approximately $115 billion in assets by the end of 2025 and Ether ETFs surpassing $20 billion [7] - Hedge fund participation in crypto has also increased, with a majority now holding crypto and planning further allocation increases [7]