JPMorgan says crypto market structure bill could be approved by mid-year and serve as positive catalyst in second half

Even as crypto sentiment remains weak, JPMorgan analysts see a possible mid-year approval of U.S. market structure legislation as a supportive factor for markets in the second half.

“While sentiment remains negative in crypto markets, we continue to believe that a potential approval of the market structure legislation most likely by mid year could serve as a positive catalyst for crypto markets into the second half of the year,” JPMorgan analysts led by managing director Nikolaos Panigirtzoglou said in a report.

The proposed market structure bill, widely referred to as the CLARITY Act, is designed to create a comprehensive regulatory framework for digital assets in the U.S. The House has already advanced the legislation, while discussions continue in the Senate.

Two major sticking points are holding up the legislation. One is how to treat stablecoin yield. Crypto firms want to offer rewards to users holding stablecoins, while banks argue that allowing yield on stablecoin balances could pull deposits away from the traditional banking system and pose financial stability risks. Another is the conflict-of-interest debate, as Democrats are pushing for restrictions that would prevent senior government officials and their families, including the President, from engaging in certain crypto-related financial activities. The White House has hosted multiple closed-door meetings between crypto industry representatives and banking groups as negotiations continue, with a compromise still possible.

“If passed it will reshape market structure by providing regulatory clarity, ending ‘regulation by enforcement,’ promoting tokenization, and facilitating greater institutional participation,” the analysts said.

Eight positive catalysts

The JPMorgan analysts highlighted eight potential positive catalysts if the bill is passed.

First, the legislation introduces a framework to classify tokens as either digital commodities overseen by the Commodity Futures Trading Commission or digital securities regulated by the Securities and Exchange Commission. This distinction could materially ease compliance burdens for major tokens. A “grandfather clause” would allow certain ETF-linked assets such as XRP, Solana, Litecoin, Hedera, Dogecoin and Chainlink to fall under the lighter CFTC regime rather than securities oversight.

Second, the legislation would introduce a grace period for new projects, allowing up to $75 million in annual fundraising without full SEC registration while they build toward decentralization. The analysts said this could boost innovation and support venture activity within U.S. markets rather than offshore.

Third, it creates a pathway for tokens initially sold as securities to transition into commodity status once “sufficiently decentralized” and the issuer no longer exercises a managerial role. This could unlock broader secondary trading and allow institutional investors to use traditional brokers and risk frameworks, the analysts said. Commodity-style oversight has already supported institutional participation in bitcoin and ether derivatives markets on CME, which continues expanding toward near-24/7 trading, they added.

Fourth, the bill sets clearer rules for crypto intermediaries, including registration requirements and custody standards. The analysts said this could allow institutions such as BNY Mellon and State Street to directly custody digital assets.

Fifth, the legislation promotes tokenization of traditional securities and real-world assets by clarifying that tokenized instruments remain subject to existing securities rules. Firms such as Intercontinental Exchange and State Street are already building infrastructure for tokenized markets.

Sixth, miners, validators and software developers would be exempt from broker-style reporting obligations during development, provided they do not engage in custodial activity. The analysts said this could support open-source innovation while still subjecting deployed systems to regulatory oversight.

Seventh, the legislation introduces small-transaction tax exemptions for everyday crypto payments and clarifies staking tax treatment, which the analysts said could encourage broader payment use and clarify net staking yields.

Eighth, the legislation may boost tokenized deposits relative to stablecoins among institutions. “If enacted, the provisions could weigh on U.S. stablecoins by recasting them more as digital cash instruments rather than investment deposits,” the analysts wrote, potentially shifting attention toward tokenized deposits or offshore yield-bearing alternatives such as Ethena’s USDe.

Overall, the analysts remain positive on crypto for this year. Earlier this month, the analysts reiterated their long-term bitcoin price target of $266,000 based on a volatility-adjusted comparison to gold.

Bitcoin was trading at around $65,425 at the time of writing, down more than 2% over the past 24 hours, according to The Block’s BTC price page.

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