- JPMorgan says falling odds of the CLARITY Act passing this year could become a major headwind for the cryptocurrency market.
- Prediction markets now estimate just a 37% chance of the bill passing before year-end as Senate negotiations remain stalled.
- The bank warns that prolonged delays could allow traditional financial institutions to dominate tokenization instead of public blockchain networks.
JPMorgan has warned that the declining likelihood of the CLARITY Act becoming law this year represents a growing risk for the cryptocurrency industry, arguing that further delays could weaken one of the market’s most important long-term catalysts.
In a new research report, analysts said prediction markets now assign only a 37% probability that the legislation will pass the U.S. Senate before the end of the year after lawmakers prioritized other bills ahead of the summer recess.
The slowdown has renewed concerns that regulatory uncertainty could continue delaying institutional adoption of digital assets.
Senate Negotiations Remain Stalled
According to JPMorgan, lawmakers remain divided over several key provisions of the legislation.
Negotiations continue over issues including ethics rules, decentralized finance oversight, enforcement authority, stablecoin yield products, and anti-money laundering requirements.
Those unresolved debates have significantly reduced expectations that the Senate will approve the legislation before the end of 2026.
JPMorgan Sees Risks for Public Blockchains
JPMorgan warned that delaying the CLARITY Act could have broader consequences beyond regulatory uncertainty.
The bank said prolonged delays increase the likelihood that tokenization and blockchain-based financial applications will be developed primarily within traditional financial infrastructure instead of on public blockchain networks.
According to analysts led by Nikolaos Panigirtzoglou, that outcome could reduce the long-term growth potential of public crypto ecosystems by shifting innovation toward incumbent financial institutions.
Institutions Continue Preparing for Crypto
The CLARITY Act is widely viewed as one of the most important pieces of proposed U.S. crypto legislation because it would establish clearer regulatory responsibilities between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
Supporters believe the framework would provide greater legal certainty for banks, brokers, exchanges, custodians, asset managers, and tokenization projects, encouraging additional institutional investment.
JPMorgan noted that institutional activity continues to expand despite the uncertainty, pointing to Citadel Securities’ $400 million investment in Crypto.com and the CFTC’s approval of the first regulated perpetual crypto futures contracts as signs of growing industry momentum.
Challenges Still Remain
While JPMorgan sees significant benefits if the legislation is ultimately approved, the bank also cautioned that portions of the current draft could create unintended consequences.
Analysts said some provisions could permit certain tokenized securities and derivatives to operate outside traditional SEC or CFTC oversight while applying lighter anti-money laundering requirements than those imposed on conventional financial institutions.
Other analysts have also expressed caution. Investment bank Jefferies previously warned that, despite advancing through the Senate Banking Committee, the CLARITY Act still faces substantial legislative hurdles before becoming law.
For now, investors are expected to closely monitor negotiations in Washington, as the legislation remains one of the most significant regulatory developments shaping the future of the U.S. cryptocurrency market.
