JPMorgan said the proposed U.S. crypto market structure bill, the Clarity Act, faces a narrowing legislative window before the midterm elections, with disputes over stablecoin yield emerging as a key obstacle. The bill cleared the Senate Banking Committee on May 14 but still requires 60 votes in the full Senate, reconciliation with House legislation, and the president's signature. The analysts, led by Nikolaos Panigirtzoglou, noted that growing pushback from the banking industry has lowered expectations for passage this year. The Clarity Act is considered the crypto industry's top legislative priority, as it would establish the first comprehensive federal framework for digital assets, clarifying whether cryptocurrencies fall under SEC or CFTC jurisdiction. A central point of contention is the treatment of stablecoin yield: the bill aims to prohibit passive interest on stablecoin balances while allowing activity-based rewards. Banks push for tighter restrictions, arguing stablecoin issuers lack deposit insurance and prudential requirements, while crypto firms seek more flexibility. JPMorgan expects that if passive yield is effectively restricted, idle crypto capital will flow into tokenized Treasuries and money-market funds. The current legislative text leaves room for interpretation, as it does not explicitly ban interest on balances.

Key facts

• Clarity Act faces narrowing legislative window before U.S. midterm elections
• Stablecoin yield dispute is a key sticking point between banks and crypto firms
• Bill would establish first comprehensive federal framework for digital assets
• JPMorgan expects idle crypto capital to flow into tokenized Treasuries if passive yield restricted

KeyAudit data perspective