CoinDesk
JPMorgan told clients on Wednesday that the window for Congress to pass the Clarity Act this year has narrowed as the midterm election calendar compresses and a dispute over stablecoin yield blocks the path forward. The bill, which cleared the Senate Banking Committee on May 14, still needs 60 Senate votes, reconciliation with House legislation, and the president's signature — and the bank's analysts led by Nikolaos Panigirtzoglou now expect progress on crypto market-structure reform to be postponed this year as a result.
The bank framed the timing as consequential: a compromise reached before the midterms could look materially different from one negotiated after, when political incentives may shift. That asymmetry is why the calendar, not the substance, is the immediate constraint on the bill's prospects.
Why it matters
The Clarity Act is widely viewed as the crypto industry's top legislative priority because it would install the first comprehensive federal framework for digital assets in the U.S., replacing years of regulation-by-enforcement with a clear SEC-vs-CFTC split for issuers, exchanges, and investors. JPMorgan argued the legislation was designed to prohibit "passive" yield — interest paid on stablecoin balances — while still permitting activity-based rewards tied to payments, trading, and loyalty programs. The carveout is intended to keep stablecoins in payments and settlement without letting them become lightly regulated savings products that compete with insured bank deposits.
The snag is that the bill's current text is less explicit about banning balance interest than policymakers have signaled, and that ambiguity is now the central fight. Banks want tighter restrictions; crypto firms want flexibility to offer yield-bearing products; the bank flagged the dispute as politically sensitive and a major obstacle to moving the bill.
Market impact
JPMorgan said that if passive stablecoin yield is effectively restricted, the existing flow of idle crypto capital into tokenized Treasuries, digital money-market funds, and tokenized deposits will accelerate.
Frequently asked questions
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What is the Clarity Act and what would it do?
The Clarity Act is the proposed U.S. crypto market-structure bill that would install the first comprehensive federal framework for digital assets, drawing a clearer line between SEC and CFTC oversight of issuers, exchanges, and investors and replacing years of regulation-by-enforcement.
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Why does JPMorgan think the bill might not pass this year?
JPMorgan said the legislative window has narrowed as the midterm election calendar compresses, and a dispute over stablecoin yield has emerged as a major political obstacle — meaning the bill may not get the remaining Senate, House, and executive steps completed before Congress's attention turns to the elections.
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What is the stablecoin-yield dispute about?
Banks want tighter restrictions on interest paid to stablecoin holders, arguing issuers do not face the same insurance and prudential requirements as depository institutions. Crypto firms want flexibility to offer yield-bearing products. JPMorgan read the bill as banning "passive" balance interest while preserving…
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What happens to crypto capital if passive stablecoin yield is restricted?
JPMorgan expects the existing trend of idle crypto capital flowing into tokenized Treasuries, digital money-market funds, and tokenized deposits to accelerate — a structural re-routing of on-chain capital toward products that mirror insured bank deposits.
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Why does timing relative to the midterms matter?
JPMorgan warned that a compromise reached before the midterms could look materially different from one negotiated after, when political incentives may shift — making the calendar itself a constraint on the bill's final shape, not just its chance of passage.
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