JPMorgan Chase (NYSE:JPM) notes that the crypto industry’s long-awaited market structure legislation, the CLARITY Act, could face further delays as political hurdles mount ahead of the U.S. midterm elections.

"Timing May Also Prove Pivotal"

JPMorgan analysts led by Nikolaos Panigirtzoglou on Wednesday raised the risk that crypto market structure reform may not be completed this year.

The analysts had previously viewed passage of the bill as a potential bullish catalyst for digital assets in the second half of 2026.

However, the legislation still faces several hurdles, including securing 60 votes in the Senate, reconciling differences with the House version and obtaining presidential approval.

“Timing may also prove pivotal, as a pre-midterm compromise could differ meaningfully from a post-midterm version as political incentives shift,” the analysts wrote as reported by The Block.

Biggest Sticking Point In Negotiations

JPMorgan identified the treatment of stablecoin yield as the biggest sticking point in ongoing negotiations.

The current framework aims to prohibit passive interest payments simply for holding stablecoins while allowing activity-based rewards tied to payments, transactions, loyalty programs and trading incentives.

Banks are pushing for stricter language, arguing crypto firms should not be allowed to offer savings-account-like products without the same regulatory requirements imposed on traditional financial institutions.

Crypto companies, meanwhile, are seeking greater flexibility to provide yield-generating products tied to stablecoin usage.

JPMorgan said the debate has become a politically sensitive issue because it could determine whether stablecoins evolve into direct competitors to bank deposits.

The analysts added that tighter restrictions on stablecoin yield could accelerate capital flows into tokenized Treasury products, digital money market funds and tokenized bank deposits instead of crypto-native yield products.

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