JPMorgan has warned that the proposed U.S. crypto market structure bill, known as the Clarity Act, may have only a limited window for passage this year as the congressional calendar tightens ahead of midterm elections.
Legislative hurdles remain
The bill cleared the Senate Banking Committee on May 14, but still needs 60 votes in the full Senate, reconciliation with House legislation, and the president’s signature.
Analysts led by Nikolaos Panigirtzoglou wrote in a Wednesday report:
“With the U.S. midterms approaching, the legislative window for passage of the Market Structure Bill has narrowed, which could postpone progress on crypto market-structure reform this year.”
Timing adds another layer of complexity — a compromise reached before the midterms could look materially different from one negotiated after, when political incentives may shift.
Stablecoin yield at the center of the fight
The Clarity Act is widely seen as the crypto industry’s most important legislative priority, as it would establish the first comprehensive federal framework governing digital assets and resolve long-running uncertainty over whether cryptocurrencies fall under the SEC or CFTC.
The biggest sticking point is stablecoin yield.
The legislation is intended to prohibit “passive” yield — effectively interest paid on stablecoin balances — while allowing rewards tied to activity like payments, transactions, and loyalty programs.
Banks have pushed for tighter restrictions, arguing stablecoin issuers don’t face the same insurance and supervisory requirements as regulated depository institutions.
Crypto firms, meanwhile, have sought greater flexibility to offer yield-bearing products, and JPMorgan described the dispute as a major obstacle that remains politically sensitive.
Capital flows could shift
Should lawmakers impose effective limits on passive stablecoin yield, JPMorgan expects idle crypto capital to flow more aggressively into tokenized Treasuries, digital money-market funds, and tokenized deposits.
The bank also noted the bill’s current language is less explicit about banning interest on balances than policymakers have suggested, leaving room for interpretation.
While that ambiguity may offer some flexibility, growing pushback from the banking industry has already lowered expectations that the measure will be enacted this year.
