Investment bank TD Cowen has downgraded its forecast for the passage of the crypto market structure bill (CLARITY Act). Analysts deem it unlikely that the document will be approved this year, reports The Block.
According to TD Cowen Managing Director Jarrett Seiberg, the political climate surrounding the initiative has deteriorated. Previously, the Senate’s relevant committee endorsed the project, despite objections from Democrats and banks. However, this does not signify final agreement among parties, merely moving the debate to the floor.
Experts have identified several factors hindering Democratic support for the CLARITY Act:
- Trump fund: the settlement between US President Donald Trump and the IRS established a $1.77 billion fund for “victims of political pressure.” Democrats view this as a dangerous precedent for the use of state funds;
- ties with the CFTC: a New York Times investigation pointed to potential influence by crypto lobbyists and the Trump family on the regulator;
- conflict of interest: reports of thousands of stock trades on behalf of Trump have led Democrats to demand stricter anti-corruption measures in the crypto law.
Republicans also find themselves in a difficult position. They must either vote against conflict of interest amendments targeting Trump or delay the process.
TD Cowen believes lawmakers will prefer to wait for the scandals to resolve. If the document is not passed before the August recess, consideration may be postponed until 2027. In this case, final industry regulation rules would not appear before 2029.
On May 14, the Senate Banking Committee approved the bill by a vote of 15 to 9.