Investment bank TD Cowen has indicated that the passage of the crypto market structure bill, known as the Clarity Act, is increasingly improbable for the current year due to a deteriorating political climate surrounding the legislation. Jaret Seiberg, managing director at TD Cowen’s Washington Research Group, stated that the environment has become more challenging for the Clarity Act, leading to pessimism regarding its enactment this year.
Key Takeaways
- The political landscape surrounding the Clarity Act has become more unfavorable, diminishing its prospects for passage this year.
- Recent controversies involving former President Donald Trump have created political complexities, potentially requiring Democrats to insist on conflict-of-interest provisions for their support.
- These developments are increasing the likelihood of legislative delays, with potential passage being pushed to 2027 and final rules not taking effect until 2029.
The assessment follows the Senate Banking Committee’s advancement of the bill earlier this month, a move that Seiberg previously described as shifting the debate to the full Senate rather than signifying a resolution, particularly concerning conflict-of-interest provisions.
Seiberg highlighted several recent events that are amplifying the political difficulties for Democrats in supporting the crypto bill. One such event is a settled legal case involving former President Donald Trump and the Internal Revenue Service. This settlement established a $1.776 billion fund intended to compensate individuals who claim to be victims of government “weaponization or lawfare,” and it also permanently prohibits the IRS from auditing past tax returns of Trump, his family, and related entities. The agreement was reached as Trump withdrew a $10 billion lawsuit against the IRS, contingent on the creation of this fund for those he believes were wronged by federal investigations or prosecutions.
Seiberg commented on the unprecedented nature of this taxpayer-funded arrangement, suggesting it appears designed to benefit the President’s supporters and could set a precedent for future presidents to engage in similar legal actions and settlements with political beneficiaries.
Further complicating matters is a New York Times investigative report that examined the influence of prediction markets and crypto interests on the Commodity Futures Trading Commission (CFTC). The report alleged that seasoned regulators were sidelined to foster a more accommodating stance within the agency towards these sectors. While Seiberg noted that these allegations remain unconfirmed and that CFTC Chair Michael Selig stated the agency’s focus is on significant misconduct rather than favoritism, the report’s findings, particularly regarding ties between the Trump family and certain crypto and prediction market businesses, are becoming increasingly relevant to congressional deliberations.
Additionally, financial disclosures from earlier this year revealed approximately 3,600 stock trades executed on behalf of Trump during the first quarter of 2026. Seiberg observed that some of these trades seemed to align with periods when Trump publicly commented on companies or policies that could impact them. The White House has maintained that these trades were conducted independently of Trump or his family.
Potential Regulatory Precedent and Political Ramifications
According to Seiberg, these cumulative developments are intensifying pressure on Democrats to insist on robust conflict-of-interest provisions as a prerequisite for their support of the crypto bill. “It makes it politically hard for a Democrat to back a crypto bill unless it contains conflicts of interest standards that apply to the President,” Seiberg stated.
The situation also presents challenges for Republicans, as they may become less inclined to advance the bill if it necessitates voting against amendments aimed at addressing conflicts of interest related to the former President. This dynamic is likely to lead to legislative inaction, with lawmakers potentially waiting for the political controversies to subside.
Seiberg anticipates that this inaction could extend the timeline for the bill, given the limited legislative calendar before the upcoming midterm elections. He previously estimated that the window for passing the crypto bill extends until the August recess, and any further delays could postpone its passage to 2027, with the implementation of final rules potentially not occurring until 2029 if the current obstacles are not resolved this year.
Original article : www.theblock.co