JPMorgan analysts say the Clarity Act's 37% passage odds threaten crypto adoption; tokenization benefits could shift to traditional finance if Senate delays persist.
Alpha Score of 64 reflects moderate overall profile with moderate momentum, moderate value, moderate quality, moderate sentiment.
JPMorgan (JPM) analysts said falling odds of the Clarity Act passing the U.S. Senate this year are a setback for crypto markets. Further delays could shift the benefits of tokenization to incumbent financial infrastructure rather than public networks, they warned.
Prediction markets now imply a 37% chance of passage before year-end, the bank noted in a Wednesday report. The Senate has prioritised other bills ahead of its summer recess. Negotiations remain deadlocked over ethics provisions, enforcement, DeFi rules, stablecoin yield treatment and anti-money laundering requirements.
"The longer the approval of the Clarity Act is postponed, the greater the threat to crypto markets from the growth of tokenization and blockchain-based applications eventually being absorbed by incumbent market infrastructure rather than accruing to public crypto networks," analysts led by Nikolaos Panigirtzoglou said.
The legislation would divide jurisdiction over digital assets between the Securities and Exchange Commission and the Commodity Futures Trading Commission. It would create a clearer regulatory framework for crypto intermediaries, tokenization and decentralised projects. The bill is widely seen as a catalyst for institutional adoption, giving banks, brokers, exchanges and asset managers the confidence to invest and build products, the bank said.
Some of that shift is already visible. JPMorgan cited Citadel Securities' $400 million investment in Crypto.com and the CFTC's approval of the first U.S.-regulated perpetual crypto futures contracts as signs that institutional flows are moving onshore.
The report also cautioned that parts of the current draft could deter participation. Allowing some tokenized securities and derivatives to trade outside SEC or CFTC oversight, and imposing lighter anti-money laundering rules than those faced by traditional firms, may create a two-tier system that some institutions avoid, the analysts said.
Jefferies warned last month that the Clarity Act still faces significant hurdles despite clearing the Senate Banking Committee, according to a separate report.
JPMorgan shares rose 1.21% to $348.89 on Thursday. The bank's Alpha Score sits at 63 out of 100, a Moderate rating.
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