JPMorgan: Crypto Market Legislation Expected to Pass by Mid-Year! 8 Major Bullish Factors to Ignite the Second Half of the Year

JPMorgan Chase is optimistic about the “CLARITY Act” passing mid-year, reshaping the regulatory framework and sparking a rally in the second half of the year. The long-term target for BTC is $266,000.

Amid a subdued cryptocurrency market atmosphere, Wall Street investment bank JPMorgan Chase’s analysis team offers reassurance. They expect that legislation targeting the structure of the U.S. crypto market could be enacted by mid-year, serving as a major bullish catalyst for the market in the second half.

Led by Managing Director Nikolaos Panigirtzoglou, the team states in their report: “Although market sentiment remains negative, we firmly believe that the market structure bill is likely to pass mid-year, which will inject confidence into the market for the second half.”

This legislation, widely known as the “Digital Asset Market Clarity Act” (CLARITY Act), aims to establish a clear and comprehensive regulatory framework for the U.S. cryptocurrency industry.

The CLARITY Act was passed in the House of Representatives last year with bipartisan support and is currently under Senate negotiations. The main sticking points are:

• The stablecoin yield debate: Crypto firms advocate for paying interest and rewards to stablecoin holders; banks strongly oppose, fearing it could drain deposits from traditional finance and threaten financial stability.
• Political conflicts of interest: Democrats propose restrictions that prohibit high-ranking government officials, including the President and their families, from participating in crypto-related financial activities to avoid potential conflicts of interest.

The White House has held multiple closed-door meetings with crypto industry representatives and banking groups, and market analysts expect room for compromise. Experts emphasize:

Once passed, the bill will fundamentally reshape the crypto market structure. It will not only bring regulatory clarity and end the era of “enforcement replacing regulation” but also promote asset tokenization and attract more institutional investors.

Passing the CLARITY Act will trigger “8 Major Bullish Factors”

JPMorgan analysts highlight that if the bill is enacted, it could bring eight potential bullish impacts:

1. Establish clear token regulation and open exemption doors: The bill will create a clear classification system: “Digital commodities” regulated by the Commodity Futures Trading Commission (CFTC); “Digital securities” regulated by the Securities and Exchange Commission (SEC). This will significantly reduce compliance burdens for mainstream tokens. A “Grandfather clause” allows assets like XRP, Solana (SOL), Litecoin (LTC), Hedera (HBAR), Dogecoin (DOGE), and Chainlink (LINK), which are linked to ETFs, to be directly included under the more lenient CFTC commodity regulation.
2. Provide a grace period for startups: The bill permits projects to raise up to $75 million annually during their transition to decentralization without full registration with the SEC. Analysts say this will foster innovation and support venture capital activities in the U.S. market.
3. Create a pathway from securities to commodities: Tokens initially issued as securities that meet “sufficient decentralization” standards and where issuers no longer hold management rights can transition to “commodities.” This could promote broader secondary market trading and allow institutional investors to trade confidently through traditional brokers.
4. Clarify intermediary regulations: The bill sets clear registration and custody standards for crypto intermediaries. This effectively paves the way for traditional giants like BNY Mellon and State Street to directly offer digital asset custody services.
5. Accelerate real-world asset (RWA) tokenization: The bill clarifies that “tokenized securities” still fall under existing securities laws. Major players like ICE and State Street are already preparing infrastructure for the tokenized market.
6. Exemptions for miners, validators, and developers: Provided they do not engage in custody activities, miners, node validators, and software developers can be exempt from broker-dealer registration obligations, encouraging open-source innovation while remaining under regulation after system launch.
7. Small transaction tax exemptions and staking tax clarity: The bill offers tax exemptions for small daily crypto payments and clarifies tax treatment for staking. This will boost consumer willingness to use crypto for payments and improve predictability of staking yields.
8. Institutional shift toward “tokenized deposits”: Analysts suggest that if the bill passes, it could weaken the positioning of stablecoins as “investment deposits,” making them more akin to digital cash tools, prompting institutions to shift toward traditional banks’ “tokenized deposits” or seek overseas yield-bearing options like Ethena’s USDe.

Bitcoin’s Long-Term Target Price Reaches $266,000

Overall, JPMorgan remains optimistic about the crypto market this year. Earlier this month, their analysts reaffirmed a long-term Bitcoin target of $266,000, based on volatility-adjusted comparisons with gold.

According to CoinGecko data, Bitcoin is currently trading at $66,000, down 0.8% in the past 24 hours.

• This article is reprinted with permission from: 《BlockBeats》
• Original title: 《“CLARITY Act” Expected to Pass Mid-Year! JPMorgan: “8 Major Bullish Factors” Ignite Second Half Crypto Market》
• Original author: Block Sister MEL