JPMorgan says regulator moves offset Clarity Act setback but risks remain

Regulator actions offer a partial offset

JPMorgan analysts said recent actions by U.S. regulators are partly offsetting the negative impact from the Senate's failure to advance the Clarity Act. However, they said those actions cannot replace a crypto market structure law passed by Congress.

The analysts also said political and legal risks are likely to remain until such a law is passed, as actions taken by agencies could be overturned if a different administration takes office.

Limited durability without Congress

According to the analysts, the Clarity Act is unlikely to pass this year and may return in 2027. They said a patchwork of regulatory actions could be overturned in as soon as two years, making them less durable than legislation.

Crypto market sentiment has still remained relatively constructive for now.

Steps being taken by U.S. agencies

• SEC tokenization plan: The SEC released a five-year "Innovation Exemption" for tokenized stocks (digital versions of shares that represent ownership of a company). Under the plan, those tokens would need to carry the same financial and voting rights as the original shares. Synthetic tokens would not qualify, and trading platforms would face limits. Companies can also choose not to have their shares tokenized. JPMorgan said more firms have recently chosen to do so, hurting sentiment for application tokens such as ether (the native token of the Ethereum blockchain).
• CFTC looks at leveraged crypto trading: The Commodity Futures Trading Commission (CFTC) is looking at ways to allow leveraged crypto trading on regulated U.S. platforms. The plan is still at an early stage and is unlikely to move forward before 2027. JPMorgan said activity moving onshore could deepen liquidity and improve price formation over time.
• OCC charters for stablecoin firms: The Office of the Comptroller of the Currency (OCC) has granted national trust charters to a growing number of stablecoin issuers and digital asset firms. A stablecoin is a digital token designed to stay close to a fixed value, often the U.S. dollar. These charters place activities such as custody, reserve management, and issuance under federal oversight. The Independent Community Bankers of America (ICBA) has sued the OCC over parts of the approvals. JPMorgan said these charters are not immune from challenge, but once granted they tend to be difficult to unwind in practice.
• FASB looks at stablecoins as cash equivalents: The Financial Accounting Standards Board (FASB) is considering allowing companies to classify certain stablecoins as cash equivalents on their balance sheets. The proposal is open for comment until Nov. 19. JPMorgan said adoption could support broader use for payments and liquidity management for corporates and institutions.

What remains in question

JPMorgan concluded that regulators can help the crypto market for now, but clear long-term rules will still require a law from Congress. The analysts said this view matches their earlier point that agency rules would not be as durable as legislation.

Sources

• The Block

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