The crypto industry’s best shot at comprehensive regulation just flatlined in the Senate, and JPMorgan thinks the fallback plan has a serious shelf-life problem.

A cloture vote on the Digital Asset Market Clarity Act, better known as the CLARITY Act, failed 49-50 on September 15, well short of the 60 votes needed to advance the legislation. JPMorgan analysts led by Kenneth Worthington warned in a subsequent note that the regulatory gap left behind will now be filled by agency rulemaking from the SEC and CFTC, a path that sounds productive until you remember that any future administration can rewrite or scrap those rules entirely.

The CLARITY Act was designed to answer one of crypto’s oldest and most consequential questions: which federal…