CLARITY Act: US Crypto Regulation Nears Finalization

JPMorgan analysts report the CLARITY Act is nearing completion, with a narrowing window for US crypto regulation before the 2026 midterms.

According to recent proposals, “passive” yield generation—earning returns solely for holding assets—will be prohibited. However, incentives linked to active utility, such as payments and platform participation, will be permitted. This distinction aims to limit competition with traditional bank deposits while maintaining the core functionality of digital assets.

JPMorgan Chase has indicated that this compromise significantly reduces the risk of “regulatory arbitrage” against the banking system, which remains a primary concern for traditional financial institutions.

Fewer Unresolved Issues

Analysts report that the number of contentious points in the bill has dropped drastically, from approximately a dozen down to just a few key topics. This suggests the text is nearing its final form.

One major remaining issue is the distribution of regulatory authority between the SEC and the CFTC. The current framework favors the CFTC regarding digital commodities and spot markets—a move generally viewed as more favorable for the industry.

Political Pressure and a Limited Window

The legislative calendar is proving to be a decisive factor. Senator Cynthia Lummis warned that the current Congressional session might be the last realistic chance to pass the law before the end of the decade.

The upcoming midterm elections in November 2026 are creating strong pressure to move the bill forward quickly. If it is not voted on by late April or early May, political dynamics could block its progress for years.

As clarity regarding the final text grows, industry sentiment is improving. Support is also coming from the administration, with White House digital asset advisors expressing confidence that the bill can pass through key Senate committees.

Potential Market Impact

According to JPMorgan Chase analysis, the passage of the CLARITY Act could unlock significant institutional interest in the crypto market. A clearer regulatory framework would reduce legal uncertainty and facilitate the entry of large-scale investors.

This is seen as a potential catalyst for the next phase of growth, particularly in the second half of 2026, when the market may begin to reflect the new regulatory environment.

The CLARITY Act is shaping up to be a critical test of the United States’ ability to create a competitive regulatory framework for digital assets. The balance between innovation and the protection of the traditional financial system remains the central question.

As the deadline approaches, the message from Washington is increasingly clear: the window for action is closing, and the decision could define the U.S. position in the global crypto economy for years to come.