JPMorgan has warned that fading expectations for the Clarity Act to clear the U.S. Senate before year-end are weighing on the outlook for crypto market infrastructure, while unresolved provisions in the bill could limit participation by banks and other large financial firms even if it advances.
In a Wednesday report led by managing director Nikolaos Panigirtzoglou, JPMorgan said prediction markets had sharply reduced their implied odds of the crypto market-structure legislation passing before the end of the year. The bank cited a 37% probability on Kalshi and a 26% probability on Polymarket, with the Kalshi figure representing the lowest implied chance recorded this year.
The shift reflects a crowded Senate agenda before the summer recess and continued disputes over the bill’s approach to stablecoin yields, decentralized finance, anti-money-laundering requirements, ethics rules and enforcement. Senators have been attempting to negotiate bipartisan revisions, but expectations of a summer vote have increasingly shifted toward the period after lawmakers return in mid-September.
Senate delays leave market structure unresolved
The Clarity Act would establish a framework for dividing oversight of digital assets between the Commodity Futures Trading Commission and the Securities and Exchange Commission. Under the proposal, digital commodities would fall under CFTC supervision, while tokens classified as securities would remain within the SEC’s jurisdiction.
That division is central to the bill’s appeal for companies operating in the U.S. crypto sector. Firms have long faced uncertainty over which regulator has authority over particular tokens, platforms and financial products. A statutory framework could give brokerages, market makers, custodians and bank-affiliated trading platforms clearer conditions for entering or expanding in the market.
The House of Representatives passed the Clarity Act last July, but the legislation has remained stuck in the Senate. The remaining arguments extend beyond the basic question of regulatory jurisdiction. Lawmakers are also debating the treatment of returns offered on stablecoin holdings, disclosure standards for crypto businesses, and how compliance duties should apply to decentralized protocols.
JPMorgan said a prolonged delay could slow the build-out of U.S.-based, institutional-grade crypto infrastructure. The bank argued that clearer rules could encourage more onshore liquidity and trading activity by giving regulated firms a route to offer crypto services under defined compliance standards rather than relying on legal interpretations that may later be challenged.
Draft provisions raise concerns for traditional finance
JPMorgan’s assessment was not simply an argument for passing the bill in its current form. The bank pointed to draft language that it believes could produce gaps in oversight and make major financial institutions less willing to participate.
One concern involves a potential framework under which decentralized finance platforms could facilitate trading in tokenized securities or tokenized derivatives without falling clearly under either SEC or CFTC jurisdiction. Tokenization refers to representing an asset, such as a fund share, bond or derivative contract, on a blockchain. If such products could operate outside the regulatory perimeter that applies to comparable traditional-market activity, regulated firms could face an uneven playing field.
The bank also cited the possibility that some crypto entities might perform functions similar to banks or broker-dealers while conducting few, if any, anti-money-laundering checks. Financial institutions generally operate under extensive customer-identification and transaction-monitoring obligations. A market-structure law that creates lighter requirements for comparable crypto activities could draw scrutiny from regulators and make bank participation harder to justify internally.
Those concerns place Senate negotiators in a difficult position. A bill designed to offer clearer rules for crypto businesses also needs to avoid creating exemptions that could undermine the compliance standards applied across the existing financial system. JPMorgan’s report suggests that the current draft may need further revision before it can attract durable support from both lawmakers and institutional market participants.
Tokenization debate extends beyond crypto platforms
JPMorgan said further delays raise the risk that tokenization and blockchain-based financial applications become integrated primarily into existing financial infrastructure rather than public crypto networks. That outcome would not end tokenization efforts, but it could shape where they occur and which entities control access.
Banks, asset managers and market-infrastructure providers can use private or permissioned systems that restrict participation to approved counterparties. Public blockchain networks, by contrast, allow broader access but raise more complex questions around compliance, identity checks, transaction monitoring and responsibility for decentralized software.
The unresolved legislation therefore affects more than spot trading rules. It could influence whether U.S. firms build tokenized products on open networks, through controlled institutional platforms, or outside the country altogether. Startups seeking a stable legal environment may find it difficult to plan product launches, secure banking services or decide where to base operations while core classifications and compliance duties remain unsettled.
Industry pressure builds ahead of a possible fall vote
The Crypto Council for Innovation added to the pressure on Thursday, releasing a 35-page report urging Congress to pass market-structure legislation without further delay. The industry group argued that regulatory uncertainty leaves U.S. companies at a disadvantage against jurisdictions that have already adopted more defined crypto rules.
The political calendar may further complicate the process. Once the Senate returns from recess, lawmakers will have limited time to resolve disputed language before attention turns more heavily toward the November elections and other legislative priorities.
JPMorgan’s lowered outlook captures the immediate challenge for the Clarity Act: Senate passage would require agreement not only on which regulator oversees crypto assets, but also on how far decentralized platforms, stablecoin issuers and tokenized financial products should be permitted to operate within the U.S. financial system.
For deeper insight into U.S. crypto policy shifts, explore how they affect markets in today’s market-structure bill outlook.
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