JPMorgan Projects CLARITY Act Could Pass Before Midterm Elections
A pivotal moment is approaching in the quest for comprehensive cryptocurrency regulations in the United States, as indicated by a recent analysis from JPMorgan Chase. The negotiations surrounding the CLARITY Act are on the cusp of a major breakthrough, with lawmakers having resolved most of the contentious issues, including the contentious topic of stablecoin rewards and agency oversight. As of now, only two or three outstanding issues remain, a significant reduction from the dozen or so complexities that existed during the initial stages of negotiation.
The CLARITY Act aims to establish a clear and comprehensive regulatory framework for digital assets in the United States, which would be a first for the country. One of the primary objectives of the proposed legislation is to clearly define the jurisdictional boundaries between federal agencies governing cryptocurrency markets, thereby eliminating the existing regulatory ambiguity between the Securities and Exchange Commission and the Commodity Futures Trading Commission. Additionally, the framework addresses the regulatory treatment of decentralized finance protocols and stablecoin issuers within the broader financial ecosystem.
A key point of contention has been whether stablecoin issuers should be allowed to distribute yield payments to token holders, with banking institutions expressing concerns that such practices could introduce systemic risks without adequate regulatory safeguards. However, recent compromise proposals regarding stablecoin yield have made significant progress, with Senator Thom Tillis planning to release draft language addressing this component in the coming days. According to JPMorgan, this updated framework may attract bipartisan support from both cryptocurrency firms and traditional banking entities, marking a significant breakthrough after extended negotiations.
Despite this progress, scheduling constraints pose a challenge, with the legislation not yet included in the Senate Banking Committee's confirmed agenda for the April 20 session. The committee's current focus is on Kevin Warsh's Federal Reserve confirmation proceedings, and while industry observers remain optimistic that the committee may still incorporate the bill into upcoming proceedings, no official markup date has been confirmed. If the committee fails to schedule consideration before the May 21 congressional recess, the implementation timelines would face additional delays, compressing the legislative window as the November 2026 midterm campaigns intensify.
JPMorgan's analysis highlights the midterm election outcomes as a significant variable, noting that if Democrats regain control of the House, cryptocurrency regulation may lose legislative priority. A policy strategist cited in the assessment noted that compromise is necessary to achieve legislative success, as "there is no such thing as a perfect bill." Meanwhile, Polymarket prediction markets have assigned a 65% probability to the CLARITY Act's passage in 2026, an 11-percentage-point increase from earlier in the week, reflecting strengthened market expectations for successful negotiation. The complete legislative text remains unpublished at this time.