JPMorgan Warns Crypto Market Structure Bill Faces Narrow Path Before Midterms Elections

TLDR

• JPMorgan says the CLARITY Act’s path is shrinking ahead of the 2026 midterms.
• The bill cleared the Senate Banking Committee on May 14.
• It still needs 60 Senate votes, House reconciliation and Trump’s signature.
• Stablecoin yield remains a key dispute between banks and crypto firms.
• Lummis warned the next crypto legislation window may not come until 2030.

JPMorgan analysts warned that the U.S. crypto market structure bill, known as the CLARITY Act, faces a shrinking path to passage this year as Congress moves closer to the 2026 midterm election cycle and disputes over stablecoin yield remain unresolved.

The bill cleared the Senate Banking Committee on May 14, but still needs 60 votes in the full Senate. It must also be reconciled with House legislation and signed by President Donald Trump before becoming law. JPMorgan analysts led by Nikolaos Panigirtzoglou said those steps leave several difficult stages ahead as the legislative calendar tightens.

The CLARITY Act is designed to create a federal framework for digital assets in the United States. Supporters say it would clarify whether certain crypto assets fall under the Securities and Exchange Commission or the Commodity Futures Trading Commission, giving issuers, exchanges and investors more defined rules.

Stablecoin Yield Becomes Core Dispute

A central issue is whether stablecoin issuers and crypto platforms should be allowed to offer yield or interest-like rewards on stablecoin balances. JPMorgan said this debate has become one of the biggest barriers to the bill’s progress.

The legislation is intended to restrict passive yield, which means payments made simply for holding stablecoins. At the same time, it would allow rewards linked to user activity, including payments, transactions, trading incentives, loyalty programs and platform use.

JPMorgan analysts said the current text is not fully explicit in banning interest on balances. That has created disagreement between banks and crypto firms. Banks argue that stablecoin issuers should not be able to offer deposit-like products without the same insurance, supervision and capital rules that apply to regulated lenders.

Crypto firms have pushed for more flexibility, saying stablecoins are central to payments, settlement and digital asset market activity. The debate matters because yield-bearing stablecoins could compete more directly with bank deposits if users view them as savings-like products.

JPMorgan said tighter limits on passive stablecoin yield could redirect idle crypto capital into tokenized Treasuries, digital money-market funds and tokenized deposits. That outcome could favor bank-linked and regulated cash products while limiting some crypto-native stablecoin business models.

Lummis Pushes Back as Banking Lobby Raises Concerns

Senator Cynthia Lummis has argued that the CLARITY Act does not pick winners and instead creates a level playing field for digital asset firms. She has also warned that Congress may not get another practical chance to pass digital asset legislation until 2030 if the current effort fails.

Lummis said the bill is needed to protect developers from unclear legal treatment and to give law enforcement stronger tools against bad actors in crypto markets. Her warning reflects concern that election-year politics could delay broad crypto legislation for several years.

The debate has also drawn public tension between lawmakers and banking executives. JPMorgan Chase CEO Jamie Dimon criticized parts of the bill, saying it could allow crypto firms to pay interest on stablecoin-like products without proper protections. He also raised concerns over anti-money laundering and Bank Secrecy Act requirements.

Lummis responded by saying Dimon’s remarks about Coinbase CEO Brian Armstrong were “distasteful.” She also said Dimon had not read the bill or was misrepresenting it. Dimon has said banks would oppose the current approach if crypto platforms can offer interest-like products without being regulated like banks.

Bank Crypto Capital Rules Add Another Layer

The CLARITY Act debate is unfolding as pro-crypto senators also press U.S. banking regulators to revise capital rules for bank crypto activity. A group of senators, including Bill Hagerty, Dan Sullivan, Cynthia Lummis, Bernie Moreno, Jon Husted and Ted Budd, sent a letter calling for a more balanced U.S. framework.

The senators criticized the Basel Committee’s 2022 crypto capital framework, which applied a 1,250% risk weight to assets such as Bitcoin. They said that treatment effectively functioned as a barrier to banks holding certain digital assets on their balance sheets.

The senators also pointed to March regulatory guidance stating that tokenized securities should receive the same capital treatment as their underlying assets. They argued that a technology-neutral principle should apply more broadly across digital assets.

The banking capital debate is tied to the CLARITY Act because the bill could allow banks to engage in a wider range of digital asset activities. If capital rules remain too restrictive, banks may have limited ability to participate even if Congress passes a new market structure law.

Treasury Secretary Scott Bessent has urged lawmakers to support the CLARITY Act and said he wants the bill passed this summer. The Blockchain Association also sent Senate leaders a letter signed by 160 former national security and law enforcement officials calling for passage.

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