JPMorgan has warned that Congress could create new gaps in financial oversight if it moves too quickly to write new rules for the crypto industry.
The warning comes as Senate leaders try to advance the Digital Asset Market Clarity Act, a broad bill that would divide federal oversight of digital assets between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
The measure has become one of the crypto industry’s top priorities after years of enforcement actions and regulatory disputes.
While JPMorgan did not name the CLARITY Act or take a formal position on the bill, its warning landed as the same issues it flagged, including market oversight, stablecoin incentives, developer exemptions and anti-money laundering tools, are about to shape the Senate vote count.
JPMorgan frames the fight around safeguards
JPMorgan’s intervention turns on one central argument: as digital assets begin to resemble traditional financial products, Congress should regulate them based on what they do, not the technology behind them.
In a Monday post, Umar Farooq, JPMorgan’s global co-head of payments, and Peter Muriungi, chief executive officer of Digital Assets and Blockchain Solutions, said digital assets are moving deeper into payments, settlement, trading and products that increasingly overlap with familiar financial services.
They said tokenization and programmable money could reduce payment friction, shorten settlement cycles and make markets more efficient. But those gains, they argued, depend on rules that preserve safeguards around investor protection, consumer balances and illicit finance.
The bank said a tokenized product should not be exempt from existing obligations simply because it is issued or traded on a blockchain.
If a token behaves like a security, investors should expect disclosure, custody and market integrity standards to apply. If a decentralized platform performs broker or exchange-like functions, it should carry obligations that support fair and transparent markets.
They wrote:
“When guardrails are weak or unclear, risk doesn’t disappear. It shifts and concentrates.”
That concern is sharpest in payments, where stablecoins have become one of crypto’s most commercially important use cases.
JPMorgan said stablecoins and tokenized money could support faster settlement, especially across borders.
However, the bank warned that payment products can drift into shadow banking when issuers or platforms offer rewards, cashback, or yield-like incentives for holding balances, without the capital, liquidity, supervision, and consumer protection rules that apply to traditional deposits.
That argument has become a central demand from banks as Congress writes crypto rules. Traditional lenders say crypto firms should not be allowed to compete with bank deposits while avoiding the costs and oversight attached to regulated banking.
JPMorgan Chief Executive Officer Jamie Dimon has been one of the most visible critics of stablecoin yield. Although lawmakers rejected the banking industry’s push for an outright ban during earlier negotiations, banks continue to seek tighter limits.
Jaret Seiberg of TD Cowen reportedly said he does not expect major changes to the bill’s stablecoin yield provisions, a sign that crypto supporters believe they can pass the legislation despite bank opposition.
Meanwhile, JPMorgan’s warning also extends beyond deposits. The bank said digital asset legislation should preserve anti-money laundering and law enforcement tools, arguing that exemptions for core parts of the crypto ecosystem could create blind spots around illicit finance, opaque ownership and market manipulation.
The firm paired that caution with a reminder that it is already building in the sector. JPMorgan pointed to Kinexys by J.P. Morgan, its blockchain business, and JPM Coin, a deposit token used for near-instant, 24/7 settlement among institutional clients.
That gives the bank’s warning its sharper edge. JPMorgan is making the case for digital assets to expand within a framework that preserves the oversight that supports existing markets.
July push turns CLARITY into a test of crypto’s Washington muscle
The cautious approach advocated by JPMorgan is colliding with a coordinated effort by congressional leaders, the White House, and digital asset advocates to move the CLARITY Act through Congress before lawmakers leave for their August recess.
Senate Banking Committee Chairman Tim Scott is pushing for a July vote, arguing that formal rules are needed to protect consumers while keeping digital asset development in the US. His urgency is echoed by Senate Majority Leader John Thune, who has urged the chamber to take up crypto market structure legislation before the August break.
The executive branch has also reinforced the compressed timeline. Patrick Witt, who directs the president’s digital assets council, framed the coming weeks as an important moment for US crypto policy, casting the legislation as part of a broader effort to strengthen American leadership in global financial markets.
That push reflects how much the bill has come to represent for a sector worn down by years of legal battles, enforcement actions, and recurring disputes over whether digital tokens should be treated as securities or commodities.
For many crypto firms, the CLARITY Act is the most realistic near-term path to a federal market structure framework.
Despite the momentum, proponents face a narrow legislative window to resolve difficult disagreements.
While the Senate Banking Committee approved the bill with a 15–9 vote in May, that initial victory did not settle the disputes now confronting leadership.
Negotiators still need to determine whether the framework can survive floor amendments, attract enough Democratic support to clear procedural hurdles, and coordinate with the House before the summer deadline.
As part of that broader push, the House Financial Services Committee has scheduled a field hearing in New York for July 17 to highlight the legislation’s potential to support financial innovation.
Still, market strategists say the calendar remains one of the bill’s biggest obstacles. Seiberg indicated that formal Senate consideration could begin during the week of July 13, setting up possible floor action during the week of July 20. He identified July 24 as a key deadline because the House is expected to leave Washington for its August recess.
According to him, missing that window could complicate the bill’s path, as the fall session is likely to be shaped by midterm election campaigns. Lawmakers may be less willing to take politically difficult votes on complex regulatory issues shortly before facing voters, making a post-recess revival uncertain.
That uncertainty is already changing expectations. Galaxy Digital recently cut its estimate of the odds that the CLARITY Act will become law in 2026 to 50%, citing a shrinking Senate calendar and unresolved policy disputes.
Those deadlines would be difficult even for a settled bill. They are more difficult now because the CLARITY Act is moving toward the floor with its most politically sensitive dispute still unresolved.
Ethics fight threatens the 60-vote path
The steepest hurdle to securing the requisite 60 votes in the Senate is an intensifying clash over government ethics.
Democrats are seeking restrictions on cryptocurrency business activity by public officials and their families, including the president.
The demand has become one of the bill’s main obstacles because Republicans may have to vote down those amendments to preserve the legislation, even as some members of their own conference face political risk in doing so.
Seiberg said GOP leaders are unlikely to take that risk unless they are confident President Donald Trump will sign the final bill.
That confidence has weakened, he said, after Trump recently refused to sign a housing bill negotiated by his own administration and said he would not sign legislation until Congress passes the Safeguard American Voter Eligibility Act.
Seiberg said it is not clear that Republicans have the votes to defeat an ethics amendment, pointing to moderate and retiring GOP senators, including Thom Tillis, Mitch McConnell, Bill Cassidy, John Cornyn, Susan Collins, and Lisa Murkowski, as lawmakers to watch.
In view of this, Jake Chervinsky of the Hyperliquid Policy Center said the bill’s fate remains unusually uncertain for major legislation in Washington. He said negotiators are still working, but there is no final deal, and the ethics issue remains the main blocker.
According to him:
“The challenge is that there likely won't be a clear “yes” without putting the bill on the floor for a vote, but it's hard to justify using limited floor time on a bill that might not pass.”
Still, he characterized July as a “now or never” scenario despite the unusual level of unpredictability surrounding the legislation.
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