TD Cowen now assigns just a one-in-three probability that U.S. crypto market structure legislation passes this year. The downgrade signals growing uncertainty for regulatory clarity that institutions have been awaiting.
The proposed legislation, known as the Clarity Act, remains stalled in the Senate despite ongoing negotiations. A recent compromise on stablecoin yield would restrict interest on idle balances while allowing activity-based rewards. Lawmakers are expected to release final language this week, with a potential committee markup targeted for late April.
Why Is The Clarity Act Losing Momentum In Senate?
Analysts say the compromise fails to satisfy key stakeholders. Platforms such as Coinbase may oppose restrictions that limit yield generation on customer balances, while banks remain concerned about stablecoins competing with traditional deposits. The proposal, backed by Senators Thom Tillis and Angela Alsobrooks, has circulated previously without securing consensus.
But political momentum appears to be weakening. Senator Mark Warner recently lowered his estimate for passage to 50% to 60%, down from earlier expectations near 80%, according to Politico. TD Cowen’s Jaret Seiberg sees even lower odds, arguing that bipartisan alignment is deteriorating as the legislative window narrows ahead of the August recess.
“The signs are not pointing to success,” Seiberg wrote, noting that even historically supportive lawmakers are moderating expectations.
He added that passage may depend on last-minute negotiations, with late July emerging as the most likely window for action if pressure builds.
Still, the implications extend beyond Washington. Market participants have been waiting for clearer rules governing exchanges, custody, and stablecoin usage in the U.S. Without legislation, firms must continue navigating a fragmented regulatory environment shaped by enforcement rather than statute. Could Congress advance the bill without full industry backing?
The next catalyst will be the release of final compromise text and whether Senate leadership pushes for a vote before the August recess deadline, which may force lawmakers toward a resolution.
