JPMorgan warns rushed crypto rules could create loopholes

JPMorgan warned Congress that moving quickly to enact crypto legislation could create new gaps in financial oversight ahead of a likely July vote on the Digital Asset Market Clarity Act. The bank identified market supervision, stablecoin incentives, developer exemptions and anti-money-laundering tools as areas of concern.

The warning appeared in a Monday post by Umar Farooq, JPMorgan’s global co-head of payments, and Peter Muriungi, chief executive of Digital Assets and Blockchain Solutions. They argued that digital assets increasingly perform functions similar to traditional financial products-payments, settlement and trading-and should be regulated by function rather than by the underlying technology.

The post said tokenization and programmable money can speed settlement and reduce friction but only if rules preserve investor disclosures, custody standards and market integrity. It added that tokens that behave like securities should meet the same disclosure and custody requirements as other securities, and that platforms performing broker- or exchange-like functions should have comparable obligations.

The authors wrote: “When guardrails are weak or unclear, risk doesn’t disappear. It shifts and concentrates.”

JPMorgan highlighted stablecoins as a particular concern, warning that payment-like products can move into shadow banking when issuers offer rewards, cashback or yield-like incentives on balances without the capital, liquidity and consumer protections that apply to bank deposits. Bank executives have pushed for limits on stablecoin yields, and CEO Jamie Dimon has criticized such yields in previous remarks.

The bank also urged that any new law preserve anti-money-laundering and law enforcement tools, noting that exemptions for parts of the crypto ecosystem could create blind spots around illicit finance, opaque ownership and market manipulation.

JPMorgan pointed to its own blockchain work, citing Kinexys by J.P. Morgan and JPM Coin, a deposit token used for near-instant settlement among institutional clients, as context for why it seeks clear rules aligning digital assets with existing oversight.

Senate leaders are pressing for a July vote before Congress breaks for an August recess. Senate Banking Committee Chairman Tim Scott has sought a July vote and Senate Majority Leader John Thune has urged the chamber to act. Patrick Witt, director of the White House digital assets council, described the coming weeks as important for U.S. crypto policy. The Senate Banking Committee approved the bill in May by a 15–9 vote, but negotiators still face unresolved disputes ahead of possible floor action.

Hill staff and market strategists have pointed to the week of July 13 as a likely start for formal consideration, with July 24 flagged as a key deadline before the House departs for its recess. The House Financial Services Committee plans a field hearing in New York on July 17. One industry participant recently reduced its estimate of the bill’s chances of becoming law in 2026 to about 50%, citing the shrinking Senate calendar and ongoing policy disagreements.

An intensifying ethics debate remains a significant legislative hurdle. Senate Democrats are seeking restrictions on cryptocurrency business activity by public officials and their families, including the president; those provisions could force some Republican senators into difficult votes. Moderates and retiring GOP senators such as Thom Tillis, Mitch McConnell, Bill Cassidy, John Cornyn, Susan Collins and Lisa Murkowski are being watched for their likely responses to ethics amendments.

Lawmakers and industry participants face a narrow window to resolve those disputes before possible floor votes. JPMorgan argued that rules should allow digital assets to operate within the oversight that supports existing financial markets while the Senate prepares for a month of debate.