JPMorgan analysts said the legislative window for Congress to pass the Clarity Act this year is narrowing as the midterm election calendar tightens, citing unresolved disputes over stablecoin yield as a major obstacle to passage.
“With the U.S. midterms approaching, the legislative window for passage of the Market Structure Bill has narrowed, which could postpone progress on crypto market-structure reform this year,” Nikolaos Panigirtzoglou, an analyst at JPMorgan, said in a report published June 4.
The Clarity Act, which cleared the Senate Banking Committee on May 14, would establish the first comprehensive federal framework governing digital assets in the U.S. The bill requires 60 votes in the full Senate to pass. It is designed to resolve uncertainty over whether cryptocurrencies fall under Securities and Exchange Commission (SEC) or Commodity Futures Trading Commission (CFTC) jurisdiction, a question that has hung over the market for years.
Stablecoin yield remains contentious
The core dispute blocking faster progress centers on how the bill treats stablecoin yield. The legislation is intended to prohibit “passive” yield (interest paid on stablecoin balances) while allowing activity-based rewards such as payments, transactions, loyalty programs and trading incentives.
Banks argue that stablecoin issuers do not face the same insurance, supervisory and prudential requirements as regulated depository institutions, making unrestricted yield offerings a competitive concern. Crypto firms, by contrast, have sought greater flexibility to offer yield-bearing products to users.
The bill’s current language is less explicit about banning interest on balances than policymakers have suggested, leaving room for interpretation and further negotiation. This ambiguity has become a sticking point as lawmakers attempt to find consensus before the midterm election calendar compresses the legislative calendar.
Capital flows at stake
If passive stablecoin yield is restricted as currently drafted, JPMorgan expects capital to flow toward alternative products including tokenized Treasuries, digital money-market funds and tokenized deposits. These alternatives would allow institutions and retail users to earn returns on digital dollar holdings without triggering the yield restrictions under debate.
The Clarity Act represents the first major attempt to create a unified federal rulebook for digital assets. Passage would mark a significant step toward regulatory clarity after years of fragmented oversight across multiple agencies. However, the compressed timeline and unresolved yield question suggest the bill faces a tighter path to enactment than previously anticipated.
