JPMorgan (JPM) said the U.S. crypto market structure bill, known as the Clarity Act, may have only a limited window for adoption this year as the congressional schedule tightens ahead of the midterm elections and the debate over stablecoin performance remains unresolved.
“As the US midterms approach, the legislative window for passage of the Market Structure Bill has narrowed, which could delay progress on
crypto market structure reform this year,” analysts led by Nikolaos Panigirtzoglou wrote in Wednesday’s report.
The bill was approved by the Senate Banking Committee on May 14, but still needs to secure 60 votes in the Senate, be reconciled with the House legislation and receive the president’s signature. Those remaining steps, coupled with growing reluctance from the banking industry, have lowered expectations that the measure will pass this year, analysts said.
Timing could also prove important. A compromise reached before the midterm elections could be significantly different from one negotiated after the elections, when political incentives could change.
The Clarity Act is widely considered the crypto industry’s most important legislative priority, as it would establish the first comprehensive federal framework governing digital assets in the United States.
Supporters say the bill would resolve long-standing uncertainty over whether cryptocurrencies fall under the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC), replacing years of regulation by enforcement with clearer rules for issuers, exchanges and investors.
Industry advocates argue that greater regulatory certainty could unlock institutional participation, encourage investment and innovation, and help keep crypto businesses and capital in the United States rather than in foreign markets with more developed digital asset regimes.
A central point of contention is the treatment of stablecoin yield. Bank analysts said the legislation aims to ban “passive” returns, meaning interest paid on stable balances, while allowing activity-related rewards such as payments, transactions, loyalty programs and sales incentives. However, the bill’s current wording is less explicit about banning interest on balances than policymakers suggest.
The distinction is key because it determines whether stablecoins can function as substitutes for bank deposits, according to the report. The exclusion is designed to preserve the role of stablecoins in payments and settlement while preventing them from evolving into lightly regulated savings products.
Banks have pushed for tighter restrictions, arguing that stablecoin issuers are not subject to the same insurance, oversight and prudence requirements as regulated depository institutions. Crypto companies, meanwhile, have sought greater flexibility to offer yield-generating products. JPMorgan said the dispute had become a major obstacle to advancing the legislation and remained politically sensitive.
If lawmakers ultimately impose effective limits on the passive yield of stablecoins, the bank expects the trend of dormant crypto capital flowing into tokenized Treasuries, digital money market funds, and tokenized deposits to accelerate.
While this outcome may disappoint crypto-native companies that have advocated for yielding stablecoins, the bill would nonetheless preserve some activity-based rewards. The report also highlights that the current legislative text leaves room for interpretation as it does not explicitly prohibit interest on balances.
Learn more: The Clarity Act Could Spark a Crypto “Yield-as-a-Service” Boom
