JPMorgan warns that delays in the CLARITY Act's Senate passage could hinder crypto market growth and shift blockchain innovation toward traditional finance, as regulatory uncertainty persists and institutional adoption faces new hurdles
JPMorgan is cautioning that the likelihood of the CLARITY Act passing the U.S. Senate this year is fading, raising concerns about the future of crypto market structure and institutional participation. The bill, which aims to clarify the regulatory boundaries between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) for digital assets, has stalled as lawmakers prioritize other legislation and remain divided over key provisions. According to JPMorgan analysts, this delay could slow the entry of major financial institutions into the crypto sector and limit the growth of onshore liquidity.
Prediction markets reflect the growing skepticism. As of July 30, Kalshi's markets implied a 55% chance of the CLARITY Act passing before year-end, the lowest level recorded in 2026, while Polymarket's odds dropped to just 28%. The Senate's decision to move other bills ahead of the CLARITY Act before its summer recess has left negotiations deadlocked over issues such as ethics rules, enforcement authority, stablecoin yield regulation, decentralized finance (DeFi) oversight, and anti-money laundering (AML) requirements. The bill's framework would assign digital commodities to CFTC oversight and digital securities to the SEC, while also establishing clearer rules for crypto intermediaries and tokenization projects.
JPMorgan's analysts, led by Nikolaos Panigirtzoglou, argue that passing the CLARITY Act would lower regulatory barriers for banks, brokerages, exchanges, custodians, and market makers seeking to enter the crypto industry. They also suggest that a defined regulatory structure could encourage activity to shift from offshore venues to U.S.-regulated markets, boosting domestic liquidity. However, the bank warns that continued delays increase the risk that blockchain-based financial innovation will be absorbed by existing financial infrastructure, rather than benefiting public crypto networks and decentralized platforms.
Despite the lack of new legislation, some institutional momentum is visible. JPMorgan points to Citadel Securities' $400 million investment in Crypto.com and the CFTC's approval of the first U.S.-regulated perpetual crypto futures contracts as signs that adoption is advancing even in a regulatory gray zone. Still, the bank does not offer an unqualified endorsement of the current bill. Its analysts highlight two provisions that could deter institutional involvement: the possibility that DeFi platforms might trade tokenized securities and derivatives outside SEC or CFTC jurisdiction, and the risk that crypto entities could face lighter AML requirements than traditional financial firms performing similar activities.
The CLARITY Act passed the U.S. House of Representatives in July 2025 but has since stalled in the Senate, where bipartisan negotiations continue. A Senate vote is not expected until after lawmakers return from their August recess in mid-September. According to a recent report from the Crypto Council for Innovation, further delays could erode U.S. regulatory influence over global crypto markets. Meanwhile, investment bank Jefferies has noted that the bill still faces significant obstacles despite clearing the Senate Banking Committee.
For U.S. crypto users and investors, the ongoing uncertainty around federal regulation adds to the complexity of evaluating exchange safety, custody arrangements, and compliance risks. Readers interested in practical steps to assess exchange legitimacy and protect their assets can find more guidance in EgonCoin's article on how to evaluate cryptocurrency exchange safety.
Based on data from Polymarket and Kalshi, the probability of the CLARITY Act passing the Senate before the end of 2026 has dropped to between 28% and 55% as of July 30. The bill cleared the House in July 2025 but has not advanced in the Senate, with the next possible vote expected after the August recess. Citadel Securities' $400 million investment in Crypto.com and the CFTC's approval of U.S.-regulated perpetual crypto futures contracts are among the largest institutional moves in the sector this year.
Dividing regulatory oversight between the SEC and CFTC is a longstanding challenge for U.S. crypto policy. The distinction between digital securities and digital commodities affects which agency sets the rules for trading, custody, and compliance. Without clear federal legislation, exchanges, DeFi protocols, and token issuers face overlapping requirements and enforcement risks. This uncertainty can discourage institutional adoption, limit product offerings, and push activity offshore, reducing transparency and investor protections in the U.S. market.
