JPMorgan Highlights Regulatory Gaps After CLARITY Act Fails in Senate

The recent failure of the Digital Asset Market Clarity Act, known as the CLARITY Act, in the Senate has left the crypto industry facing significant regulatory uncertainty. A cloture vote on September 15 fell short at 49-50, lacking the 60 votes needed to advance the legislation. JPMorgan analysts, led by Kenneth Worthington, expressed concerns that the regulatory gap left by this setback will be filled by agency rulemaking from the SEC and CFTC, which may lack durability.

The CLARITY Act aimed to clarify which federal agency oversees different aspects of the crypto market, proposing to assign the CFTC authority over digital commodities and the SEC oversight of investment contracts. Despite gaining momentum earlier in the year, the bill encountered obstacles related to ethics provisions, stablecoin yield rules, and anti-money laundering requirements, ultimately leading to its defeat in the Senate.

JPMorgan noted that while the Act is not technically dead, the likelihood of it passing before the end of the legislative session is slim, with prediction market odds dropping to approximately 6.6%. The bank highlighted that agency rules are less stable than legislative statutes, as they can be easily altered or rescinded by future administrations. This fragility is compounded by the potential for legal challenges under the Administrative Procedure Act.

In light of the stalled legislation, both SEC Chair Paul Atkins and CFTC Chairman Michael Selig have indicated their intent to proceed with their own rulemaking efforts. JPMorgan reiterated its support for the principles of the CLARITY Act, emphasizing the need for strong consumer protections and capital requirements for stablecoins. However, the contentious issues that derailed the bill are likely to resurface in agency rulemaking, which may lack the transparency of the legislative process.

New Developments on the CLARITY Act

• The Digital Asset Market Clarity Act of 2025 was introduced on May 29, 2025, by Rep. French Hill (R-AR).
• It passed the House on July 17, 2025, with a bipartisan vote of 294-134.
• The Act establishes a three-tier taxonomy for digital assets: digital commodities under CFTC jurisdiction, investment contract assets under SEC jurisdiction, and a distinct category for permitted stablecoins.
• Digital commodity exchanges, brokers, and dealers are required to register with the CFTC, ensuring customer protection through asset segregation.
• The Act grants the CFTC explicit jurisdiction over spot digital commodity markets, addressing the previous lack of federal oversight in this area.
• It preserves the SEC's role in overseeing securities offerings while narrowing the definition of what qualifies as a security in the crypto context.
• An updated draft text released on September 14, 2026, indicates ongoing negotiations to refine the framework.
• The bill includes exemptions for certain decentralized finance activities, with specifics to be determined through joint rulemaking.