JPMorgan warns that falling odds of the CLARITY Act passing Senate this year are a setback for crypto; prediction markets price a 37% chance of passage before year-end.
Crypto Regulation News
JPMorgan analysts warned on July 30 that fading prospects for the CLARITY Act passing the US Senate this year represent a setback for crypto markets. Prediction markets on Kalshi put the odds of passage before year-end at 55%, the lowest implied probability recorded this year. Polymarket puts the figure even lower, at 28%.
The Senate moved other legislation ahead of the CLARITY Act before its summer recess, stalling progress on the bill. Negotiations remain deadlocked over ethics provisions, enforcement powers, stablecoin yield rules, decentralized finance (DeFi) oversight, and Anti-Money Laundering requirements.
The CLARITY Act would divide regulatory jurisdiction over digital assets between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Digital commodities would fall under CFTC oversight, while digital securities would remain with the SEC. The bill would also create a more defined framework for crypto intermediaries, tokenization projects, and decentralized applications.
Delays Raise Risk of Tokenization Gains Going to Traditional Finance
JPMorgan analysts led by managing director Nikolaos Panigirtzoglou said the legislation, if passed, would lower barriers for banks, brokerages, exchanges, custodians, and market makers to enter the crypto industry. It would also increase onshore liquidity as activity shifts from offshore venues to US-regulated markets, the analysts said.
The bank warned that continued delays carry a specific structural risk. The longer the CLARITY Act is postponed, the greater the chance that growth in tokenization and blockchain-based financial applications is absorbed by existing financial infrastructure rather than benefiting public crypto networks, the analysts said.
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Some signs of institutional momentum are already visible without the legislation in place. JPMorgan pointed to Citadel Securities' $400 million investment in Crypto(dot)com and the CFTC's approval of the first US-regulated perpetual crypto futures contracts as examples of adoption advancing in the current environment.
Parts of Current Draft Could Deter Institutional Players
The bank did not give the bill an unqualified endorsement. Analysts flagged two specific provisions in the current draft that could deter institutional participation. One concern is that DeFi platforms could trade tokenized securities and derivatives entirely outside SEC or CFTC jurisdiction under the bill's current language. The other is that crypto entities may face lighter Anti-Money Laundering requirements than banks and broker-dealers performing equivalent activities.
The US House of Representatives passed the CLARITY Act in July 2025, but the bill has since stalled in the Senate. Senators are working on bipartisan revisions, though a vote is not expected until after lawmakers return from their August recess in mid-September. Investment bank Jefferies separately noted last month that the bill still faces significant hurdles despite clearing the Senate Banking Committee. The Crypto Council for Innovation published a 35-page report on July 30 urging lawmakers to pass crypto market structure legislation without further delay, warning that inaction risks ceding US regulatory influence to other jurisdictions.
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