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JPMorgan analysts say the CLARITY Act may face a tighter path through Congress this year as the US midterm election calendar approaches. The crypto market structure bill remains under debate, with stablecoin yield rules now standing as one of the main disputes between banks and crypto firms.
JPMorgan analysts led by Nikolaos Panigirtzoglou said the legislative window for the CLARITY Act has ‘narrowed’ as election season draws closer. The analysts said the tighter calendar could delay progress on crypto market structure reform this year.
The bank had earlier viewed passage of the bill as a possible positive catalyst for crypto markets in the second half of the year. However, the latest report shows more caution as the bill still faces several steps before it can become law.
According to the analysts, the bill cleared the Senate Banking Committee on May 14. Nevertheless, it still needs 60 votes in the full Senate, alignment with the House version, and a presidential signature.
A major sticking point is whether crypto platforms can offer interest-like rewards on stablecoin balances. JPMorgan analysts described the issue as a ‘core dispute’ as it could decide whether stablecoins operate like deposit substitutes.
The bill aims to ban passive yield, which refers to interest paid simply for holding stablecoins. At the same time, it seeks to allow rewards linked to payments, transactions, loyalty programs, trading activity, and platform use.
However, JPMorgan analysts said the current language is ‘less explicit in banning interest on balances.’ This phrasing has left room for disagreement between banks and crypto companies.
Banks want tighter limits on stablecoin yield. They argue that crypto platforms should not offer savings-account-like products without bank-style regulation. Meanwhile, crypto firms want more room to offer rewards linked to stablecoin products.
JPMorgan CEO Jamie Dimon recently said he is unhappy with the CLARITY Act in its current form. He said banks would oppose the bill if crypto platforms can offer interest-like products without facing the same rules as banks.
The debate comes as major US banks prepare their own response to stablecoin competition. JPMorgan, Citi, Bank of America, Wells Fargo, and other large banks plan to support a tokenized deposit network operated by The Clearing House.
The planned system would connect traditional payment rails with digital asset infrastructure. Notably, the move shows how large banks are preparing for stronger competition from stablecoins and crypto firms.
JPMorgan analysts said tighter limits on passive stablecoin yield could push idle crypto cash toward tokenized Treasuries, digital money market funds, or tokenized deposits. That shift may benefit products closer to traditional finance.
Timing remains a major hurdle for the CLARITY Act. JPMorgan analysts said a pre-midterm compromise could differ from a post-midterm version as political incentives change.
Treasury Secretary Scott Bessent has urged lawmakers to pass the bill this summer. Additionally, the Blockchain Association sent a letter to Senate leaders signed by 160 former national security and law enforcement officials, asking the Senate to advance the bill.
However, TD Cowen Washington Research Group Managing Director Jaret Seiberg remains doubtful that the bill will pass this year. He said several hurdles remain, while the political environment around the legislation continues to worsen.
For now, the CLARITY Act faces a narrow path. The bill remains central to US crypto policy, but stablecoin yield rules, bank opposition, Senate voting requirements and the election calendar continue to shape its chances this year.
Also Read: Latest Crypto News, Bitcoin, Ethereum, XRP & Market Trends - Analytics Insight
