A closely watched effort to create a unified regulatory framework for digital assets in the United States could lose momentum as the 2026 midterm elections approach, according to a new warning from investment bank TD Cowen.
Key Takeaways:
- The 2026 US midterm elections could delay passage of a major crypto market structure bill until 2027, TD Cowen warns.
- Senate Democrats may withhold support ahead of the elections.
- Conflict-of-interest provisions targeting senior officials, including Donald Trump, remain a central point of debate.
In a note published Monday, the bank’s Washington Research Group said the sweeping crypto market structure bill currently moving through Congress faces growing political risk as lawmakers begin positioning for the next election cycle.
TD Cowen Warns US Crypto Legislation May Be Delayed Until 2027
The legislation, known as the CLARITY Act after passing the House in July and referred to in the Senate as the Responsible Financial Innovation Act, is now seen as more likely to clear Congress in 2027 rather than next year.
Full implementation could be pushed as far out as 2029.
TD Cowen analysts said Senate Democrats may hesitate to back the bill ahead of elections that could reshape control of Congress, which currently tilts Republican.
With outcomes uncertain, lawmakers could opt to delay key decisions until after the midterms, when the balance of power may be clearer.
“Election outcomes are always uncertain, which is why Democrats may cut a deal,” the bank said, adding that political timing rather than policy substance could ultimately determine the bill’s fate.
A bipartisan draft released by the Senate Agriculture Committee in November attempted to address one of the most contentious issues: conflicts of interest.
The proposal includes safeguards that would bar senior government officials, including Donald Trump and members of his family, from holding cryptocurrencies or playing a direct role in the industry while in office.
Those provisions reflect long-standing concerns among Democratic lawmakers over Trump’s links to crypto-related ventures.
Critics have pointed to connections involving World Liberty Financial, a crypto mining operation known as American Bitcoin, the launch of Trump-branded tokens, and the high-profile pardon of former Binance chief executive Changpeng Zhao.
TD Cowen Says Delayed Timeline Could Ease Political Friction Over Crypto Bill
TD Cowen suggested that time could work in favor of compromise. If the bill passes in 2027 and takes effect in 2029, some of the immediate political pressure may ease.
Under that scenario, the crypto industry would need to accept that presidential election results could shape final rules, while Democrats might have to concede that conflict provisions would not apply retroactively to Trump.
Meanwhile, the legislative process continues. The Responsible Financial Innovation Act is awaiting markups in both the Senate Banking Committee and the Senate Agriculture Committee, with reports indicating the first markup could occur later this month.
Last week, Coinbase’s institutional strategy chief stated that comprehensive crypto market structure legislation will take longer to finalize than stablecoin rules, but remains confident that bipartisan momentum will carry the bill across the finish line in 2026.
John D’Agostino told CNBC that regulatory clarity abroad and accelerating talent flight from the US create urgent pressure to establish federal frameworks this year.
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