JPMorgan Warned of Risks to the Crypto Market Without the CLARITY Act

JPMorgan analysts warned that the measures taken by US regulators would only partially compensate for the failure of the CLARITY Act vote, but would not replace the law on the structure of the crypto market. This is what The Block writes about.

In September, the Senate failed to advance the document. The bank considers its adoption unlikely by the end of the year and allows a return to the initiative in 2027.

According to experts, alternative solutions may attract institutional participants in the near future, but they will not provide certainty in the future. Only legislation will make the system of rules more sustainable in the long term, analysts stressed.

Without the law, the industry remains dependent on individual regulatory measures, which the future administration may review. Experts warned of such a risk two years later – in the event of a change of administration in the White House.

One of the initiatives following the failure of the CLARITY Act was the five-year Innovation Exemption program for tokenized stocks, introduced by the U.S. Securities and Exchange Commission. Such assets should provide the same financial and voting rights as the original securities. Synthetic instruments are not excluded, and there are restrictions for trading platforms.

At the same time, companies may refuse to tokenize their shares. According to JPMorgan, more and more issuers have recently used this right. This worsened the sentiment around blockchain platform tokens, including ether, amid weakening flows into ETFs and positions in the futures market.

The US Commodity Futures Trading Commission is considering the possibility of allowing trading of crypto assets with leverage on regulated American platforms. The initiative is at an early stage. Analysts consider its promotion until 2027 unlikely. JPMorgan clarified that the transfer of trading activity to the United States can increase liquidity and improve pricing. This will increase the attractiveness of regulated platforms for institutional participants.