A major U.S. crypto market structure proposal, the Clarity Act, is unlikely to pass Congress in 2025, with meaningful movement now expected to slip into 2027, according to a report by TD Cowen’s Washington Research Group. The firm noted that even if lawmakers agree on a framework by 2027, full implementation of final rules may not arrive until 2029.
Conflict-of-interest dispute stalls near-term progress
TD Cowen attributed the delay primarily to a conflict-of-interest dispute that has created a legislative impasse between Democrats and Republicans. The firm said Democrats are pushing for strict ethics provisions that would prevent senior government officials from owning, operating, or profiting from cryptocurrency businesses.
These measures directly address concerns involving President Donald Trump and his family, according to the report. Democrats argue that including conflict-of-interest safeguards is essential for the bill’s credibility and integrity. However, Republicans strongly oppose any rules that would take effect during the current administration.
“The disagreement is not about whether to regulate crypto, but about when and to whom the restrictions would apply,” the report said.
To break the deadlock, TD Cowen outlined a possible compromise. Lawmakers could delay the enforcement of the conflict-of-interest clause by about three years, allowing the broader crypto market structure bill to advance while postponing the ethics provisions. Under this structure, the restrictions would not apply to President Trump’s term but would activate during a subsequent administration.
The firm suggested that such a delay might create enough political space for both parties to agree on core regulatory standards without reopening ideological disputes.
Political timing shapes legislative path
TD Cowen emphasized that election-year dynamics are another factor behind the slow pace. The firm noted that Democrats may see little incentive to accelerate passage before the 2026 midterm elections, especially if they anticipate a chance to retake control of the House of Representatives.
Analysts from the Washington Research Group said Democrats might prefer to negotiate under improved political conditions.
“Election outcomes are always uncertain, which is why Democrats may cut a deal,” wrote Jaret Seiberg, managing director at TD Cowen. “That could happen quickly, as staff have been working on the technical language for months.”
Still, Seiberg added that “time favors enactment as the problems disappear if the bill passes in 2027 and takes effect in 2029.” He explained that Democrats would need to acknowledge that the conflict-of-interest clause would not apply to Trump, while the crypto sector would need to accept a delay in regulatory clarity.
Core obstacle remains ethics language
At the heart of the issue is the ethics language that would limit financial entanglements between government officials and crypto projects. Democrats, according to TD Cowen, see such restrictions as critical to preventing insider influence as the industry expands.
Bloomberg previously reported that Trump and his family have generated about $620 million from crypto-related ventures, including World Liberty Financial, a decentralized finance and stablecoin project. The report also cited family holdings in the bitcoin mining company American Bitcoin and promotional ties to the TRUMP and MELANIA meme coins launched shortly before Trump assumed office.
Seiberg said,
“One potential way to overcome Trump’s objections is to make the conflict of interest provision effective three years after enactment. This pushes it past the next inauguration, which means it would never apply to Trump. We do not believe Democrats would accept this deal unless it also pushed the rest of the bill out three years.”
This proposed timeline underscores how intertwined ethics disputes and political considerations have become in the crypto policy debate.
Extended timeline could shift global competitiveness
TD Cowen’s report suggested that a delay to 2029 could have broad implications for U.S. crypto competitiveness. While the extended window could allow for a more detailed, bipartisan structure, it also risks leaving domestic firms at a disadvantage relative to jurisdictions such as the European Union, where frameworks like the Markets in Crypto-Assets Regulation (MiCA) are already being deployed.
Despite the stalled progress, the bank’s analysts expect ongoing negotiations throughout 2026. The Clarity Act remains a central piece of the broader crypto market structure effort, serving as a foundation for future rulemaking.
For now, the expectation remains that the most consequential reforms to U.S. digital asset regulation will not materialize until late in the decade, as lawmakers navigate ethics provisions, election cycles, and institutional priorities.
Gunel Ismayilova
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