JPMorgan says the recent wave of US regulatory activity from the SEC, the CFTC, the OCC and the FASB only partly offsets the Clarity Act's failure in the Senate. Until Congress passes a market structure law for digital assets, the US bank expects elevated political and legal risk premiums in crypto to persist.

A Market Structure Bill Stalled in Congress

The Clarity Act is the planned US market structure law for digital assets. It is designed to clarify the division of oversight between the securities regulator, the SEC, and the derivatives regulator, the CFTC, and to give digital asset trading a legal framework. The House of Representatives passed the bill in July 2025 by 294 votes to 134, and the Senate Banking Committee followed in May 2026 with a 15 to 9 vote.

A team of JPMorgan analysts led by Nikolaos Panigirtzoglou assessed the situation after the Senate defeat in a report published this week. In September, the same team had written that agency rules could bring crypto firms more clarity and capital, though in their view such rules would be less durable than legislation. Even so, the analysts describe market sentiment as "relatively constructive."

The Senate Fell Eleven Votes Short of the Required 60

In September, the Senate failed to pass the cloture motion—the procedural step for advancing a bill past a filibuster—that would have opened consideration of H.R. 3633. The vote was 49 to 50, while passage required 60 votes, leaving the motion eleven short. The 60-vote bar reflects the Senate's long-standing filibuster practice, which effectively requires support from at least some members of both parties for most major legislation. According to summaries from law firms and trade media, all 49 yes votes came from Republicans, while Collins, Hawley, Moran and Tillis broke ranks and voted no. These reports say Tillis voted no for procedural reasons, so that he could move for a new vote later. In addition, Democrat Coons did not take part. As a result, the Senate only voted on procedure and never debated the bill's text.

Two questions dominated the dispute. One concerned ethics rules for digital assets held by officials; the other was whether stablecoin issuers may offer yield or rewards. Bill sponsor Cynthia Lummis had warned before the vote that a failure would mean it was "over." Since then, the realistic paths forward have been a lame-duck session after the November elections or the next Congress. In US legislative practice, a lame-duck session is the period when the sitting Congress reconvenes after the elections but before the newly elected one is sworn in. The JPMorgan analysts consider passage this year unlikely, but the bill could return in 2027.

SEC and CFTC Open the Market Through Agency Action

The SEC responded in September with the so-called Innovation Exemption. It consists of two conditional exemptions that run for five years until 2031 and allow trading in tokenized NMS (National Market System) stocks. In this setting, tokenization means representing traditional shares as blockchain-based digital tokens. The first concerns the definition of "exchange" for tokenized securities venues; the second, the definition of "dealer" for liquidity providers. The scope covers shares tokenized by the issuer itself or, under certain conditions, by a third party. According to JPMorgan, the tokens must carry the same economic and voting rights as the original shares, while synthetic products, security-based swaps, rights and warrants remain excluded.

The agency has also capped the scope. Tier 1 allows 75 symbols with no more than 0.25% of average daily volume per stock, while Tier 2 allows 250 symbols with 2.5%. Access remains limited to approved participants, and trading venues must be US persons that comply with sanctions administered by the Office of Foreign Assets Control (OFAC). Issuers, meanwhile, can opt out of having their shares tokenized. More firms have recently made use of this opt-out, which according to JPMorgan weighs on sentiment for application tokens such as ether, the asset that powers the Ethereum network. ETF inflows and futures positioning initially rose after the SEC announcement but have since weakened. Moreover, the exemption remains temporary, and the SEC is considering formal rulemaking with public comment.

At the same time, the CFTC is exploring whether to allow leveraged crypto trading on regulated US platforms. The project is at an early stage, and the JPMorgan analysts see little chance of implementation before 2027. If it succeeds, the bank believes a shift of trading to the US could deepen liquidity and improve price discovery, with regulated venues—the kind institutions tend to prefer—standing to benefit.

The ICBA Lawsuit Challenges the OCC Charters

The banking regulator OCC has granted national trust charters to a growing number of stablecoin issuers and digital asset firms. The federal license allows these firms to hold assets in custody, manage reserves and tokens under federal oversight. It rests on the chartering final rule, which the agency published in March 2026 and which has been in effect since April 2026. Meanwhile, the OCC is ahead with implementation of the GENIUS Act—the federal stablecoin statute enacted in 2025—as its recent final rule for stablecoin issuers shows.

In early October, the Independent Community Bankers of America (ICBA) sued the OCC and Comptroller Jonathan Gould, filing the case in the US District Court for the District of Columbia. The plaintiff stands out: the association of US community banks is taking aim at the licenses of new competitors. The suit challenges the chartering rule, Interpretive Letter 1176 from 2021 and the preliminary approval for Protego from February 2026, and the association seeks to have them vacated and to bar the OCC from using them for further charters. The lawsuit does not, however, suspend licenses that have already been granted.

The JPMorgan analysts concede that the charters are "not immune to challenges," citing this very lawsuit. Nevertheless, once granted, charters are "hard to reverse in practice," they argue. Among the agency measures, the licenses are therefore likely to be among the more durable ones.

The FASB Weighs Stablecoins as Cash Equivalents

The Financial Accounting Standards Board (FASB), which sets accounting standards for US companies, published Exposure Draft 2026-ED400 on ASC 230, the standard for the statement of cash flows, in August 2026. The draft does not change the definition of cash equivalents but adds examples under which certain stablecoins can qualify. Under US accounting rules, cash equivalents are short-term, highly liquid holdings that companies report together with cash on their financial statements. The conditions include redemption on demand and a direct redemption right against the issuer at a known amount, as well as segregated reserves of at least 1:1 in short-term, highly liquid assets. Secondary market liquidity alone is not enough. All companies would also have to newly disclose the components of their cash equivalents.

The FASB is accepting comments until November 19, 2026. JPMorgan sees adoption of the rule as support for stablecoin use beyond trading, for example in payments and in liquidity management by companies and institutions. For now, however, it remains only a draft.

Why Only Legislation Like the Clarity Act Would Lower the Risk Premium

The analysts base their skepticism on the lack of durability. The industry must rely on a "patchwork" of agency measures, they write. If a Democrat wins the White House, a new administration could reverse them in just two years. An exemption like the SEC's rests on an agency decision that future agency leadership can change, whereas only Congress can change a law.

"Regulatory-driven actions can boost institutional participation in the crypto ecosystem in the short term, but only legislation would make the framework more durable over the long term." — Nikolaos Panigirtzoglou and team, analysts, JPMorgan

On top of that, the SEC's exemption expires in 2031 anyway, while the CFTC's own plans remain at an early stage. Until Congress passes a comprehensive market structure law, JPMorgan therefore expects elevated political and legal risk premiums in crypto to persist.

Source: Crypto Valley Journal