JPMorgan has cautioned that regulatory rules issued by the Securities and Exchange Commission cannot replicate the durability of the CLARITY Act, after the landmark crypto market structure bi
JPMorgan has cautioned that regulatory rules issued by the Securities and Exchange Commission cannot replicate the durability of the CLARITY Act, after the landmark crypto market structure bill suffered a significant setback in the U.S. Senate.
The Digital Asset Market Clarity Act failed to survive the politics of the U.S. Senate as a 49-50 vote fell far short of the 60 supporters required to advance.The defeat followed a breakdown in bipartisan negotiations, particularly over ethics and conflict-of-interest provisions tied to public officials' crypto holdings.
The 50 senators who voted no included all Democrats and four Republicans: Susan Collins of Maine, Josh Hawley of Missouri, Jerry Moran of Kansas, and Thom Tillis of North Carolina.Tillis, however, added a motion so that the bill can be reconsidered and brought up again for a vote.
The CLARITY Act is proposed U.S. legislation intended to create a clearer federal framework for digital assets, addressing a central question in crypto regulation: when should an asset be regulated by the SEC, and when should the CFTC oversee it?The bill would have established a framework for crypto, divided oversight between the two agencies, set registration requirements, and strengthened protections against money laundering.
JPMorgan said crypto regulation led by the SEC and CFTC lacks long-term sustainability after the CLARITY Act failed, warning that rulemaking by the two agencies could be reversed by the next administration, making it harder for the crypto industry to secure the statutory regulatory clarity it has long sought.
The bank said the CLARITY Act is not fully dead, noting it could still return for another vote before the current Congress adjourns. However, JPMorgan expects attention to shift to the SEC and CFTC, while cautioning that agency rules are less durable because future administrations can change them and courts can challenge them.
JPMorgan added that the odds of the bill passing before year-end fell to about 6.6% after the failed vote.The failed vote leaves the future of comprehensive U.S. crypto market structure legislation uncertain ahead of the November midterm elections.
In the absence of market structure law, the industry will be focusing close attention on the federal regulators, including the SEC and CFTC, that are already at work on crypto rules.Though executives and investors say legislation would lend certainty and help attract long-term capital, much of the industry has resigned itself to the likelihood that regulatory momentum may have to be built outside of Congress.
Sources:The Block: JPMorgan says Clarity Act 'not fully dead,' but passage window 'extremely narrow'CoinDesk: Crypto Clarity Act flames out in failed U.S. Senate voteCNBC: Senate cloture vote on Clarity Act fails, dealing regulatory blow to crypto industry
