CLARITY Act on Thin Ice: TD Cowen Predicts Legislative Stall Through 2026

The legislative momentum for the CLARITY Act, a pivotal bill for the cryptocurrency industry, appears to be hit by a significant reality check. Despite clearing early hurdles in the Senate, experts now warn that the path to enactment is becoming increasingly narrow.

Political Hurdles and Partisan Deadlock

According to Jaret Seiberg, Managing Director at TD Cowen’s Washington Research Group, the outlook for the CLARITY Act passing this year has grown pessimistic. While the bill successfully navigated the Senate Agriculture and Banking Committees, it now faces a "new wall" of political complexity. The primary challenge lies in bridging the gap between Democrats and Republicans, particularly regarding provisions related to presidential conflicts of interest. Seiberg notes that even though the bill advanced through committees, this does not reflect a broad consensus. Instead, the focus of the conflict has simply shifted to the full Senate floor, where underlying disputes between parties and banking interests remain unresolved.

Rising Tensions in Washington

External political factors are further complicating the bill’s chances. Tensions have flared following legal disputes involving the IRS and high-profile investigative reports regarding the influence of prediction markets on the Commodity Futures Trading Commission (CFTC). These controversies have raised the political "temperature" in Washington, making it harder for lawmakers to find the middle ground required for specialized financial legislation. As the midterm elections approach, the legislative window is rapidly closing. TD Cowen suggests that lawmakers are likely to choose delay over action, effectively pushing the possibility of a final vote into 2026 as the political calendar becomes increasingly crowded with election-year priorities.