JPMorgan Analysts Project Mid-2026 Approval for U.S. Crypto Market Structure Bill, Citing Eight Potential Catalysts

Market structure legislation in the United States, commonly referred to as the CLARITY Act, could receive approval by mid-year and serve as a positive catalyst for digital asset markets in the second half of 2026, according to a February research report from JPMorgan.

The proposed framework, which has advanced through the House and remains under Senate discussion, aims to establish comprehensive regulatory oversight for digital assets, potentially ending the “regulation by enforcement” approach and facilitating greater institutional participation. Bitcoin was trading near $65,425 at the time of reporting, reflecting continued market uncertainty despite the constructive long-term outlook that includes a reiterated $266,000 price target based on a volatility-adjusted comparison to gold.

Legislative Status and Key Sticking Points

The CLARITY Act, designed to create a comprehensive regulatory framework for digital assets in the United States, has been advanced by the House while discussions continue in the Senate. Two major issues are currently delaying the legislation.

The first concerns stablecoin yield treatment. Crypto firms seek to offer rewards to users holding stablecoins, while banks argue that permitting yield on stablecoin balances could divert deposits from the traditional banking system and create financial stability risks. Industry representatives have characterized banking industry opposition as anti-competitive, noting that average U.S. savings accounts yield only 0.39% compared to the Federal Funds rate between 3.50% and 3.75%.

The second involves conflict-of-interest provisions. Democrats are pushing for restrictions preventing senior government officials and their families, including the President, from engaging in certain crypto-related financial activities. The White House has hosted multiple closed-door meetings between crypto industry representatives and banking groups as negotiations continue, with compromise still possible.

Coinbase withdrew its support for the bill in January 2026, though subsequent meetings have occurred and the exchange’s CEO has indicated there is a “path forward.”

Eight Potential Catalysts Identified in Legislative Framework

The proposed legislation contains eight specific provisions that could positively impact digital asset markets if passed.

Token Classification Framework: The legislation would introduce a framework classifying tokens as either digital commodities overseen by the Commodity Futures Trading Commission or digital securities regulated by the Securities and Exchange Commission. A “grandfather clause” would allow certain ETF-linked assets including XRP, Solana, Litecoin, Hedera, Dogecoin and Chainlink to fall under the lighter CFTC regime rather than securities oversight.

Grace Period for New Projects: The bill would permit new projects to raise up to $75 million annually without full SEC registration while working toward decentralization. This provision could boost innovation and support venture activity within U.S. markets rather than offshore.

Securities-to-Commodities Transition Pathway: Tokens initially sold as securities could transition to commodity status once “sufficiently decentralized” and the issuer no longer exercises a managerial role. This could unlock broader secondary trading and allow institutional investors to use traditional brokers and risk frameworks, similar to how commodity-style oversight has supported institutional participation in bitcoin and ether derivatives markets on CME.

Intermediary Rules and Custody Standards: Clearer rules for crypto intermediaries, including registration requirements and custody standards, could allow major financial institutions to directly custody digital assets.

Tokenization Promotion: The legislation promotes tokenization of traditional securities and real-world assets by clarifying that tokenized instruments remain subject to existing securities rules. Multiple financial firms are already building infrastructure for tokenized markets.

Developer Protections: Miners, validators and software developers would be exempt from broker-style reporting obligations during development, provided they do not engage in custodial activity. This could support open-source innovation while still subjecting deployed systems to regulatory oversight.

Tax Treatment Clarifications: The legislation introduces small-transaction tax exemptions for everyday crypto payments and clarifies staking tax treatment, which could encourage broader payment use and clarify net staking yields.

Tokenized Deposits vs. Stablecoins: The bill may boost tokenized deposits relative to stablecoins among institutions. If enacted, the provisions could recast U.S. stablecoins more as digital cash instruments rather than investment deposits, potentially shifting attention toward tokenized deposits or offshore yield-bearing alternatives.

Institutional Participation and Market Implications

A clear regulatory framework could remove one of the largest obstacles to institutional capital deployment. With defined oversight structures, large asset managers, pension funds and corporate treasuries that have remained cautious could gain compliance confidence to increase allocations.

Commodity-style oversight has already supported institutional participation in bitcoin and ether derivatives markets on CME, which continues expanding toward near-24/7 trading. The CLARITY Act could extend similar clarity to additional digital assets.

Industry observers note that crypto markets historically recover through gradual processes rather than immediate rebounds. Significant upward movements typically occur after extended periods of low sentiment and reduced trading activity.

Current Market Conditions

Bitcoin was trading at approximately $65,425 at the time of reporting, down more than 2% over 24 hours. The broader cryptocurrency market has experienced range-bound trading with thin volumes, as traders struggle to identify catalysts strong enough to lift prices out of their current lull.

Despite near-term weakness, long-term price targets remain constructive based on comparative analysis with traditional assets such as gold.

FAQ: U.S. Crypto Market Structure Legislation

What is the CLARITY Act and what would it do?

The CLARITY Act is proposed U.S. legislation designed to create a comprehensive regulatory framework for digital assets. It would establish clear jurisdictional boundaries between the SEC and CFTC, classify tokens as either digital commodities or securities, create pathways for new projects to raise capital without full SEC registration, and set rules for intermediaries including custody standards.

Which cryptocurrencies could benefit from the grandfather clause?

The proposed legislation includes a grandfather clause that would allow certain ETF-linked assets—including XRP, Solana, Litecoin, Hedera, Dogecoin and Chainlink—to fall under CFTC jurisdiction as commodities rather than SEC securities oversight, potentially reducing compliance burdens.

What are the main obstacles to the bill’s passage?

Two primary issues are delaying the legislation: how to treat stablecoin yield, with crypto firms seeking to offer rewards while banks oppose this as a threat to traditional deposits; and proposed restrictions preventing senior government officials and their families from engaging in crypto-related financial activities. Industry disagreements have also complicated negotiations.