JP Morgan: Clarity Act Passage Unlikely Before Year-End as Focus Shifts to SEC and CFTC

Analysts at JP Morgan have indicated that the likelihood of the U.S. 'Clarity Act,' which aims to structure the crypto market, passing before year-end has significantly diminished.

The Senate's procedural vote on Tuesday failed to reach the required 60 votes for advancement, with a 49-50 rejection. Notably, some Democratic lawmakers who had participated in drafting the bill voted against it, and Republican Senator Tom Tillis reversed his stance shortly before the vote.

JP Morgan noted that even the already-established Geniuses Act faced similar procedural hurdles. With only about two and a half weeks remaining for Senate activity before midterm elections, investors and the crypto industry are likely to shift focus toward regulatory updates by the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC).

Market reactions have been mixed regarding the delay and potential alternatives. Galaxy Digital founder and CEO Mike Novogratz blamed government ethics clauses for the bill's failure, criticizing both parties. He expects SEC and CFTC to continue refining crypto regulations, with Congress potentially codifying them later.

Mizuho Securities also noted that if legislative delays persist, regulators may act without waiting. They acknowledged that recent declines in Circle and Coinbase shares due to stablecoin revenue uncertainty were understandable, while Robinhood, Figure, and Stratege were unfairly sold off.

Other Wall Street analysts similarly suggested the Clarity Act's early passage is less likely but expect continued regulatory evolution through SEC rulemaking. They believe long-term industry development will proceed at an uneven pace, with legislative solutions being preferable over time.