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.
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.
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.
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.
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.
A bipartisan draft released by the Senate Agriculture Committee in November attempted to address one of the most contentious issues: conflicts of interest.
“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.
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.
Those provisions reflect long-standing concerns among Democratic lawmakers over Trump’s links to crypto-related ventures.
