JPMorgan Says CLARITY Act Isn’t Dead, but Odds of Passage This Year Are Slim

The CLARITY Act, which failed to clear a procedural vote in the U.S. Senate, could still return for another vote. Even so, the window to pass the bill this year is rapidly closing.

The Block reported on September 16 that JPMorgan analysts led by Kenneth Worthington wrote in a report that the CLARITY Act is “not completely dead.” Still, they added that the time to pass the measure this year is “extremely tight and continues to narrow.”

The bill failed in the Senate on September 15, winning 49 votes in favor and 50 against. That left it short of the 60 votes needed to advance to debate. Still, a procedural path remains after Republican Senator Thom Tillis switched to a “no” vote at the last minute and filed a motion to reconsider, leaving Republican leaders with a way to bring the bill back.

JPMorgan noted that the GENIUS Act, a stablecoin measure, also failed on its first cloture vote before eventually becoming law. The bank said the CLARITY Act remains on the Senate calendar and could be put to another vote before the congressional session ends at year-end.

Even so, the bank said the conditions for reviving the bill are challenging. With limited Senate session days remaining before the midterm elections and a lame-duck session afterward, there is little time left for further negotiations. Key supporters are also showing signs of fatigue after lengthy talks.

As the outlook for the bill has weakened, market attention may shift to the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission. SEC Chairman Paul Atkins and CFTC Chairman Michael Selig have both indicated they will continue working on crypto-related rules.

JPMorgan said regulator-led rulemaking could give the digital-asset industry a degree of regulatory clarity and help attract additional capital inflows. But it added that such rules would be less durable than legislation enacted by Congress because they could be revised or scrapped after a change in administration, or altered by court decisions.

Investors are watching especially closely to see whether the SEC adopts an “innovation exemption” for digital-asset projects such as tokenized stocks. JPMorgan said there has been speculation that the SEC could pursue its own approach after seeing how the CLARITY Act unfolds.

JPMorgan said the focus of future crypto regulatory debate may shift from congressional legislation to rulemaking by the SEC and CFTC.