TD Cowen has lowered its expectations for the CLARITY Act's passage, citing a deteriorating political climate and various conflicts.
TD Cowen has revised its expectations regarding the likelihood of the CLARITY Act, a proposed framework for U.S. cryptocurrency regulation, passing in 2023. Analysts suggest the bill is facing significant challenges that may hinder its approval this year, as reported by The Block.
Jarrett Zeiberg, Managing Director at TD Cowen, pointed out that the political environment related to the legislation has deteriorated. Although a Senate committee had previously shown support for the bill, the ongoing partisan disputes indicate deeper divisions that may complicate its progress.
Key issues identified by experts include:
- Trump Fund Controversy: Democrats are concerned about the $1.77 billion fund established following President Trump's IRS settlement, which they see as a troubling precedent for governmental financial management.
- Influence Concerns: Investigations suggest possible crypto lobbyist influence on the Commodity Futures Trading Commission (CFTC), raising suspicions regarding regulatory integrity.
- Conflict of Interest: Scrutiny over Trump's stock trades is prompting calls from Democrats for more rigorous anti-corruption provisions within the bill.
Republicans are also facing a dilemma as they must decide whether to oppose amendments that address these conflicts, potentially further delaying legislative progress.
TD Cowen anticipates that legislators may choose to postpone discussions until the current controversies have cooled down. If the bill is not approved prior to the August recess, its consideration could extend into 2027, with final regulatory guidelines not expected until at least 2029.
It is worth noting that the Senate Banking Committee had previously voted 15 to 9 in favor of the bill on May 14.
