Negotiations over the U.S. CLARITY Act, a sweeping digital asset market structure bill, is now in its final stretch, with lawmakers narrowing down what was once a long list of disagreements to just two or three core issues.
According to JPMorgan analysts, the debate has shifted from more than a dozen unresolved points earlier in the process to a much tighter focus, mainly around how stablecoin rewards should be treated and how far regulatory oversight should extend across the crypto market.
The discussions are taking place in Washington ahead of the 2026 midterm cycle, where there is growing political urgency to bring long-awaited clarity to the digital asset industry.
The CLARITY Act is designed to build on last year’s GENIUS Act, which was the first major U.S. law to formally establish a licensing framework for dollar-pegged stablecoins used in payments.
While GENIUS focused on issuance rules and reserve backing, CLARITY is meant to go further by defining how the broader crypto market is structured and which regulators are responsible for which parts of it.
JPMorgan sees CLARITY Act as a major crypto catalyst in late 2026
JPMorgan analysts have suggested that if the bill is passed in its current form, it could become one of the most important catalysts for the digital asset sector in the second half of 2026.
The key reason is that it would finally reduce long-standing uncertainty over whether crypto assets fall under the Securities and Exchange Commission or the Commodity Futures Trading Commission, a jurisdictional overlap that has created confusion for years among exchanges, developers, and institutional investors.
At the heart of the remaining disagreement is a politically sensitive question: whether stablecoin holders should be allowed to earn yield simply by holding tokens. This issue has become central because it directly affects how major exchanges, fintech platforms, and wallet providers structure their products and attract users.
Over time, many of these platforms have experimented with yield-like incentives, and regulators are now debating how far those models should be allowed to go.
Recent draft language circulating in the Senate reportedly takes a restrictive stance. FinTech Weekly says that the current version of the bill would not allow passive yield on stablecoin balances, but it would still allow rewards based on what users do. These could be payments, subscriptions, loyalty programs, or incentives based on transactions.
To prevent companies from finding workarounds, regulators such as the SEC, CFTC, and Treasury would be given a year to define detailed rules and close potential loopholes.
Yield rules remain key hurdle as CLARITY Act deal nears, Coinbase says
Industry voices say the language around yield is one of the final sticking points holding up agreement. Coinbase chief legal officer Paul Grewal has publicly suggested that negotiations are very close to a breakthrough and expects the bill to move forward toward a Senate Banking Committee markup once lawmakers return from recess.
His comments reflect a broader sense within parts of the industry that a compromise is finally within reach.
The debate has also drawn strong attention from traditional banks, which are watching the development of yield-bearing stablecoins with concern. Large financial institutions, including JPMorgan, argue that allowing stablecoins to offer returns similar to savings products could trigger a shift of deposits away from regulated banks.
The reason for their apprehension is the potential for crypto exchanges to leverage such a loophole through the offering of yields on their platforms while operating free from the need for capital and liquidity management obligations required of traditional banks.
In a recent conference call, JPMorgan’s Chief Financial Officer Jeremy Barnum expressed his fear about the possibility of using yield-bearing stablecoins for regulatory arbitrage if the assets were not subjected to consumer protection obligations similar to those in case of bank deposits.
Barnum’s view is in line with the overall sentiment among the banking community of creating clear distinctions between payment stablecoins and yields-bearing financial products.
According to media reports, the White House has tried to find common ground between the two groups by proposing to distinguish between passive yield and active rewards.
Under this model, users do not generate rewards simply by holding the stablecoin, although they may still qualify for rewards associated with genuine economic activity, like conducting transactions or utilizing the platform’s services.
According to policy experts, this is an attempt to deter the exodus of large deposits from the traditional banking sector while still maintaining the utility of stablecoins as efficient means of settling transactions.
Needless to say, the effects of the dispute are going to be significant for well-known parties like the USD Coin, which is priced at nearly $0.9998 with its market cap estimated to be around $78.6 billion. At the end of the day, the result of this bill will determine how much room issuers and platforms will have in terms of designing reward schemes without falling under securities and banking laws.
On its part, the CLARITY Act is an extension of the GENIUS Act enacted in 2025, which stipulates that any significant payment stablecoins are required to be fully backed at par by either cash or short-term U.S. Treasury securities under a federal or state licensing framework as a Permitted Payment Stablecoin Issuer.
Whereas GENIUS is designed to emphasize the security of issuance and reserves, CLARITY seeks to bring closure to the overall proposal by establishing trading parameters, market design, and regulatory jurisdiction among agencies.
With negotiations fast approaching their conclusion, the result has been framed as a pivotal moment for cryptocurrency regulation within the United States.
With just a handful of points still to be ironed out, policy makers are now closer than ever to establishing the regulations that will guide the integration of stablecoins into the traditional financial ecosystem.