🏛️ Wall Street Sounds the Alarm on Crypto Legislation
Investment bank TD Cowen sent a sobering signal to the crypto market in early 2025, warning that the landmark cryptocurrency market structure bill known as the CLARITY Act is unlikely to become law this year. According to the firm’s policy analysts, a worsening political environment under the Trump administration is creating conditions that make meaningful legislative progress extremely difficult. TD Cowen projected an 18 to 36 month timeline for the bill, with some scenarios pushing final passage all the way to 2027. That kind of delay matters enormously for traders and investors who have been waiting years for concrete regulatory certainty around digital assets in the United States. The longer uncertainty lingers, the harder it becomes for crypto projects to raise capital, launch tokens, or build partnerships with regulated financial institutions.
📋 What the CLARITY Act Is Actually Trying to Do
The CLARITY Act, formally known as the Digital Asset Market Clarity Act of 2025, represents one of the most ambitious regulatory proposals ever put forward for the crypto industry. At its core, the bill aims to settle a long-running jurisdictional dispute between two powerful regulators: the Securities and Exchange Commission and the Commodity Futures Trading Commission. For years, both agencies have claimed authority over digital assets, creating a legal gray zone that has tangled up projects, exchanges, and investors in costly uncertainty. The CLARITY Act would draw a clear line, defining which assets fall under SEC oversight as securities and which fall under the CFTC as commodities. The House of Representatives actually passed the bill in July 2025 by a 294-134 vote, with broad bipartisan support. The problem is what comes next: the Senate.
🏛️ The Senate Roadblock: Five Hurdles, One Shrinking Calendar
Even after clearing the House with strong bipartisan backing, the CLARITY Act faces a five-step gauntlet in the Senate before it can reach the President’s desk. The Senate Banking Committee must mark up and vote to advance the bill. Then the full Senate must pass it with 60 votes, a threshold that requires meaningful Democratic cooperation. After that, the Banking Committee’s version must be reconciled with a parallel bill from the Senate Agriculture Committee, which oversees the CFTC. The merged Senate bill then needs to be reconciled with the House version before a final presidential signature. Each step consumes time from a calendar that is already under severe pressure. Senate Banking Committee Chairman Tim Scott originally targeted September 2025 for a floor vote, then shifted to end of 2025, and later told Fox Business he hoped for a floor vote by June or July 2026. Every week of delay compresses the window further.
🏦 Banking Lobbies and the Stablecoin Standoff Adding Friction
One of the most persistent obstacles slowing the bill has been a fierce lobbying battle between the traditional banking industry and crypto firms over stablecoin yield rules. The existing GENIUS Act, which was signed into law, prohibits stablecoin issuers from sharing interest directly with holders. Banks now want to extend that restriction to ban all stablecoin rewards, including exchange-based incentives that crypto platforms use to attract users. Crypto companies are pushing back hard, arguing such rules would choke their business models. A compromise brokered with White House involvement in early 2026 attempted to draw a line between direct yield and activity-based rewards, but the agreement remained fragile. Two Senate Banking Committee markup sessions were cancelled before a May 2026 session was finally scheduled. The traditional banking sector has lobbied intensively against provisions it sees as threatening, while crypto industry groups have pushed equally hard in the opposite direction.
🗓️ The 2026 Midterm Shadow and the 2030 Worst-Case Scenario
The political clock is perhaps the most underappreciated threat to the CLARITY Act’s passage. The 2026 midterm elections are rapidly approaching, and as campaigning begins to dominate the political agenda, the legislative calendar compresses dramatically. Senators facing competitive races are unlikely to dedicate floor time or political capital to complex technical legislation when they need to focus on their districts. TD Cowen’s analysis explicitly cited the midterm election cycle as a key variable that could push the final timeline to 2027. But the warning does not stop there. Senator Cynthia Lummis of Wyoming, who chairs the Senate Banking Subcommittee on Digital Assets and has been one of crypto’s most vocal congressional advocates, has warned publicly that failure to pass the CLARITY Act before the Memorial Day recess could push the next viable legislative window to 2030 or beyond. Senator Bernie Moreno echoed those concerns. If the political window closes, a shift in congressional control after the midterms could change the entire legislative calculus.
🎯 What This Means for Crypto Investors Right Now
For retail and institutional investors, the TD Cowen warning translates directly into an extended period of regulatory uncertainty that carries real market consequences. DeFi protocols, centralized exchanges, and decentralized exchange operators all face delayed product launches and fundraising challenges without a clear legal framework. Token issuers cannot confidently structure offerings without knowing which regulator has authority. Institutional capital that was preparing to enter the market pending regulatory clarity may hold back longer. Meanwhile, the European Union’s Markets in Crypto-Assets framework has been in effect since 2024, and jurisdictions like Singapore and Abu Dhabi are actively building infrastructure to attract the blockchain companies that feel underserved by U.S. policy delays. TD Cowen’s report is a signal, not a death sentence for crypto legislation, and the Senate Banking Committee’s bipartisan 15-9 vote advancing the bill in 2026 shows momentum still exists. But investors should calibrate expectations accordingly: meaningful U.S. regulatory clarity for crypto is still a matter of political will, timing, and a legislative calendar that is running short on room.
Sources
https://www.theblock.co/post/402649/td-cowen-crypto-bill-worsening-political-environment-trump
https://cryptorank.io/news/feed/5a58a-crypto-market-structure-bill-delay-td-cowen
https://bitcoinmagazine.com/news/senate-schedules-clarity-act-markup
https://www.galaxy.com/insights/research/clarity-act-update-final-push
https://www.banking.senate.gov/newsroom/majority/chairman-scott-senate-banking-committee-advance-clarity-act-in-historic-bipartisan-vote
https://www.lw.com/en/us-crypto-policy-tracker/legislative-developments
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