A sweeping US crypto market structure bill is increasingly likely to face delays until at least 2027, according to a report from TD Cowen’s Washington Research Group. The legislation, known as the CLARITY Act in the House and the Responsible Financial Innovation Act in the Senate, is viewed as vulnerable to shifting political dynamics ahead of the 2026 midterm elections. Analysts warned that electoral uncertainty could discourage Senate Democrats from backing the bill in the near term.
With control of Congress at stake, lawmakers may be reluctant to advance a framework that could carry political risks during a high-stakes election cycle. TD Cowen noted that Democrats could opt to stall negotiations until after the midterms, when the balance of power may change, and political incentives become clearer. While bipartisan engagement continues, timing rather than substance appears to be the primary obstacle.
Conflict Provisions and Institutional Concerns
A key source of friction centers on conflict of interest safeguards included in a bipartisan Senate draft released in November. These provisions aim to limit direct involvement in crypto markets by senior government officials, including the president and immediate family members. The issue has drawn heightened attention as lawmakers scrutinize perceived ties between political leadership and digital asset ventures.
Several Democrats have publicly raised concerns about potential conflicts linked to crypto-related businesses and endorsements connected to President Donald Trump and his family. From an institutional perspective, these concerns complicate efforts to deliver a neutral regulatory framework that balances innovation with public trust. TD Cowen suggested that delaying the bill could reduce political sensitivity, as the conflict provisions would be less relevant if implementation occurs after the current administration.
Regulatory Implications for the Crypto Industry
If enacted, the Responsible Financial Innovation Act would significantly reshape the US regulatory landscape by assigning greater oversight of digital assets to the Commodity Futures Trading Commission. This shift would reduce the Securities and Exchange Commission’s role in regulating crypto markets, an outcome long favored by industry participants seeking clearer jurisdictional boundaries.
However, further delays would extend regulatory uncertainty for exchanges, issuers, and institutional investors. Without a comprehensive framework, firms continue to operate under fragmented guidance and enforcement-driven oversight. TD Cowen noted that passage in 2027, with implementation potentially delayed until 2029, may represent a pragmatic compromise that allows political tensions to ease while preserving the bill’s core structure.
The Senate Banking Committee and Senate Agriculture Committee are expected to begin markups this month, signaling continued momentum despite the longer-term outlook. Still, analysts cautioned that legislative progress will remain closely tied to electoral developments. For the crypto industry, the outcome underscores how political cycles increasingly shape the pace and direction of regulatory reform in the United States.