What to know:

Wall Street giant Goldman Sachs (GS) said improving regulation and the emergence of crypto use cases beyond trading are underpinning a constructive outlook for the industry, particularly for infrastructure companies that support the ecosystem without being as exposed to market cycles.

Regulatory uncertainty remains the main barrier for institutions, and that backdrop is shifting rapidly, the bank said in a report on Monday.

STORY CONTINUES BELOWDon't miss another story.Subscribe to the Crypto Daybook Americas Newsletter today.See all newslettersBy signing up, you will receive emails about CoinDesk products and you agree to our terms of use and privacy policy.

"We see the improving regulatory backdrop as a key driver to continued institutional crypto adoption, especially for buyside and sellside financial firms, as well new use cases for crypto developing beyond trading," analysts led by James Yaro wrote.

According to Yaro, forthcoming U.S. market structure legislation could be a pivotal catalyst.

After President Donald Trump took office, a leadership overhaul at the Securities and Exchange Commission (SEC) culminating in the confirmation of Paul Atkins as chair, prompted the regulator to retreat from years of aggressive enforcement against the crypto industry. The SEC dropped nearly all its pending cases and withdrew from several active court fights.

Trump made promoting the U.S. crypto industry a central policy goal, a stance Atkins echoed by making it a top priority at the SEC, an independent regulator traditionally insulated from direct White House control.

Draft bills now circulating in Congress would clarify how tokenized assets and decentralized finance (DeFi) projects are regulated, and define the roles of the SEC and Commodity Futures Trading Commission (CFTC), steps Goldman says are essential to unlocking institutional capital.

Passage in the first half of 2026 would be especially significant, given the risk that U.S. midterm elections later that year could delay progress, the report said.

The bank pointed to its own survey data showing that 35% of institutions cite regulatory uncertainty as the biggest hurdle to adoption, while 32% see regulatory clarity as the top catalyst.

Despite growing interest, allocations remain modest: Institutional asset managers have invested about 7% of assets under management in crypto, though 71% say they plan to increase exposure over the next 12 months, leaving substantial room for growth.

The bank said adoption has already accelerated through familiar vehicles such as exchange-traded funds (ETFs). Since their approval in 2024, bitcoin ETFs have grown to roughly $115 billion in assets by the end of 2025, while ether ETFs have surpassed $20 billion. Hedge fund participation has also increased, with a majority now holding crypto and planning further allocation increases.

Beyond trading, the analysts highlighted tokenization, DeFi and stablecoins as areas poised for expansion. Stablecoin legislation passed last year clarified oversight and reserve requirements, helping the market grow to nearly $300 billion in capitalization.

Meanwhile, changes in bank supervision, the rollback of restrictive custody accounting rules, and the approval of new digital-asset bank charters have collectively lowered barriers for traditional financial institutions to engage with crypto, the report added.

U.S. market structure legislation is poised to be the dominant force for digital assets, crypto asset manager Grayscale said in a report last month. The firm's analysts said they expect a bipartisan crypto market structure bill to become law in 2026, marking a milestone for the asset class.