JPMorgan analysts say U.S. crypto market structure legislation could be approved by mid-year and serve as a positive catalyst for markets in the second half, identifying eight specific provisions that could reshape the industry.
The Mid-Year Approval Timeline
JPMorgan analysts led by Nikolaos Panigirtzoglou said the CLARITY Act could be approved by mid-year despite weak crypto sentiment, The Block reported on Sunday.
“If passed it will reshape market structure by providing regulatory clarity, ending ‘regulation by enforcement,’ promoting tokenization, and facilitating greater institutional participation,” the analysts wrote.
The House has already advanced the legislation while Senate discussions continue. Two major sticking points remain: stablecoin yield treatment and conflict-of-interest restrictions for senior government officials and their families.
On stablecoin yield, crypto firms want to offer rewards to users while banks argue this could pull deposits from traditional banking and pose financial stability risks.
The White House has hosted multiple closed-door meetings between crypto industry representatives and banking groups.
The Eight Catalysts
First, the token classification framework distinguishes digital commodities overseen by the CFTC from digital securities regulated by the SEC.
A “grandfather clause” allows ETF-linked assets including XRP (CRYPTO: XRP), Solana (CRYPTO: SOL), Litecoin (CRYPTO: LTC), Hedera (CRYPTO: HBAR), Dogecoin (CRYPTO: DOGE), and Chainlink (CRYPTO: LINK) to fall under lighter CFTC oversight.
Second, new projects get a grace period allowing up to $75 million in annual fundraising without full SEC registration while building toward decentralization.
This could boost innovation and support venture activity within U.S. markets rather than offshore.
Third, tokens initially sold as securities can transition to commodity status once “sufficiently decentralized” and the issuer no longer exercises a managerial role. This unlocks broader secondary trading and allows institutional investors to use traditional brokers.
Fourth, clearer rules for crypto intermediaries including registration requirements and custody standards could allow institutions like BNY and State Street to directly custody digital assets.
Fifth, tokenization of traditional securities gets clarification that tokenized instruments remain subject to existing securities rules. Intercontinental Exchange and State Street are already building infrastructure.
Sixth, miners, validators, and software developers are exempt from broker-style reporting during development, provided they don’t engage in custodial activity.
Seventh, small-transaction tax exemptions for everyday crypto payments and clarified staking tax treatment could encourage broader payment use and clarify net staking yields.
Eighth, the legislation may boost tokenized deposits relative to stablecoins among institutions.
The provisions could recast U.S. stablecoins as digital cash instruments rather than investment deposits, potentially shifting attention toward tokenized deposits or offshore alternatives like Ethena’s USDe.
Image: Shutterstock
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