Investment bank TD Cowen has downgraded its forecast for the passage of the crypto market structure bill (CLARITY Act). Analysts believe the bill is unlikely to be approved this year, according to The Block.
According to TD Cowen Managing Director Jarrett Zeiberg, the political climate surrounding the initiative has worsened. Previously, a relevant Senate committee supported the bill despite objections from Democrats and banks. However, this does not indicate final agreement among parties, but merely shifts the dispute to the floor of the chamber.
Experts have identified several factors preventing Democrats from supporting the CLARITY Act:
- Trump Fund: President Donald Trump’s settlement with the IRS created a $1.77 billion fund for "victims of political pressure." Democrats view this as a dangerous precedent for the use of government funds;
- Connections to CFTC: An investigation by the New York Times pointed to potential influence from 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 legislation.
Republicans also find themselves in a difficult position. They will either have to vote against conflict of interest amendments aimed at Trump or delay the process.
TD Cowen believes lawmakers will prefer to wait until scandals subside. If the bill is not passed before the August recess, consideration could be delayed until 2027. In that case, final regulatory rules for the industry would not emerge until at least 2029.
Recall that on May 14, the Senate Banking Committee approved the bill by a vote of 15 to 9.