JPMorgan analysts say recent actions by U.S. regulators partly offset the Senate's failure to advance the Clarity Act. They warn that political and legal risks remain until Congress passes a crypto market structure law.
JPMorgan analysts said recent actions by U.S. regulators are partly offsetting the negative impact of the Senate's failure to advance the Clarity Act. The analysts, led by Nikolaos Panigirtzoglou, wrote in a Wednesday report that regulator-led measures can encourage institutional participation over the near term.
According to the JPMorgan analysts: "only legislation would make the framework more durable over the longer term". The analysts said the Clarity Act is unlikely to pass this year and may return in 2027.
SEC releases exemption for tokenized stocks
The SEC released a five-year "Innovation Exemption" for tokenized stocks last month. The tokens would need to carry the same financial and voting rights as the original shares, and synthetic tokens would not qualify.
Companies could also choose not to have their shares tokenized. The analysts said more firms have recently chosen to do so, hurting sentiment for application tokens such as ether as ETF flows and futures positioning weakened.
CFTC studies leveraged trading as OCC grants charters
The CFTC is looking at ways to allow leveraged crypto trading on regulated U.S. platforms. The analysts said the plan is still at an early stage and unlikely to move forward before 2027.
Meanwhile, the OCC has granted national trust charters to a growing number of stablecoin issuers and digital asset firms. However, the Independent Community Bankers of America has sued the OCC over parts of the approvals.
FASB weighs stablecoins as cash equivalents
The Financial Accounting Standards Board is considering allowing companies to classify certain stablecoins as cash equivalents on their balance sheets. The proposal is open for comment until Nov. 19.
The analysts concluded that regulators can help the crypto market for now, but clear long-term rules will still require a law from Congress.
Source: The Block
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