JPMorgan Says Odds of Clarity Act Passing Congress This Year Have Diminished

JPMorgan said the chances of the US crypto market structure bill known as the Clarity Act passing Congress this year have diminished.

CoinDesk reported on June 3 that JPMorgan said in a report the bill is unlikely to clear Congress this year. The bank said the approaching US midterm elections are narrowing the legislative window for advancing the measure. That could delay progress on crypto market structure reform this year.

The Clarity Act cleared the Senate Banking Committee in mid-May. It still must win at least 60 votes on the Senate floor, be reconciled with the House bill and be signed by the president before it can become law.

JPMorgan cited opposition from the banking industry as a main reason the bill's prospects have weakened. The bank also said a compromise reached before the midterm elections could differ from one struck after the vote.

A central issue in the bill is whether interest payments on stablecoins would be allowed. The current version of the Clarity Act does not explicitly prohibit interest payments on stablecoin balances. That has led banks and the crypto industry to interpret the provision differently.

If interest payments on stablecoins are restricted, idle crypto funds could move quickly into tokenized Treasuries and digital money market funds, or MMFs, JPMorgan said. That would disappoint crypto companies that had been counting on yield-bearing stablecoins. The bank added that activity-based rewards could still remain in some form.