U.S. regulators’ individual actions are easing the short-term gap created by the failure of congressional legislation, but structural uncertainties—including the risk of policy reversals after a change in administration—remain.
In a recent report, U.S. investment bank JPMorgan said administrative actions by major regulators were partly offsetting the negative impact of the failure to advance the U.S. Senate’s crypto market structure bill, the Clarity Act. However, it warned that political and legal uncertainty—including potential policy reversals following a change in administration—would persist as long as the industry lacked a permanent legal foundation established through congressional legislation.
The JPMorgan research team, led by Nikolaos Panigirtzoglou, assessed that measures taken by the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC) and Office of the Comptroller of the Currency (OCC) were helping lower the barriers to market entry for institutional investors despite the congressional stalemate. Key measures included the SEC’s introduction of a five-year Innovation Exemption program for tokenized stocks; the OCC’s issuance of National Trust charters to stablecoin and crypto-custody companies; the Financial Accounting Standards Board’s (FASB) review of whether certain stablecoins should be classified as cash-equivalent assets; and the CFTC’s exploration of leveraged trading on regulated platforms.
However, the research team said these administrative relief measures could not fully replace legislation. Without a codified federal law, the regulatory approach could shift sharply depending on the administration’s orientation. In particular, it said that if power changes hands in a future presidential election, the current crypto-friendly regulatory measures could face a complete review or reversal within as little as two years. It also identified ongoing legal disputes over the administrative actions themselves as a continuing burden, including a lawsuit filed by the Independent Community Bankers of America (ICBA) opposing the OCC’s approval of trust charters for crypto companies.
As a result, with the possibility of the Clarity Act passing this year becoming increasingly remote, comprehensive legislation is increasingly likely to be delayed until after 2027. JPMorgan concluded that market participation could continue in the short term, supported by regulators’ accommodative measures, but that the fundamental risks would only be resolved if the U.S. Congress ultimately passed comprehensive market structure legislation to establish a long-term, predictable ecosystem for the crypto industry.