The timing of comprehensive regulation aimed at establishing clear rules for the cryptocurrency market in the US has become a subject of renewed debate. Investment bank TD Cowen stated that legislation regarding the structure of the cryptocurrency market could be delayed until 2027 due to political obstacles, with final implementation potentially taking until 2029. A note published by the company's Washington Research Group emphasized that the balance of power in Congress, particularly clauses concerning conflicts of interest, complicates the process.
TD Cowen puts the brakes on cryptocurrency regulations
According to TD Cowen's assessment, while technically the draft law could advance this year, political calculations make delays more likely. The Democrats' belief that they can regain control of the House of Representatives in the 2026 midterm elections reduces motivation for a quick compromise. However, the note also states that party officials have been working on the technical language of the draft for months, and that uncertainty can always open the door to compromise.
The most critical issue at the heart of the report is the regulations concerning conflicts of interest. Democrats are expected to seek provisions prohibiting high-ranking public officials and their families from owning or operating cryptocurrency companies. Donald Trump and his family's crypto projects are at the center of this debate. TD Cowen notes that such a clause would be unacceptable to Trump, but could remain on the table if the effective date were postponed for several years. The debate centers around the Trump family's activities in the crypto sector. According to Bloomberg's estimate last year, Trump earned approximately $620 million from crypto ventures linked to his family. These include partnerships with World Liberty Financial, which operates in the DeFi and stablecoin space, and a Bitcoin mining company. Furthermore, memecoins issued in the names of Trump and Melania Trump have also been the target of criticism in Congress. TD Cowen suggests that a possible compromise could be to postpone the effective date of the conflict of interest clause for three years, effectively excluding Trump. However, in such a scenario, Democrats might also request a postponement of the entire law for several years. This situation heightens the tension between the rapid clarity the industry expects and the political realities.
The law in question is seen as the next major hurdle in US crypto regulation after the GENIUS Act, which included stablecoin regulation. The regulation aims to clarify fundamental issues such as the classification of digital assets, which institution will oversee which area, and what rules market participants will be subject to. Although the House of Representatives passed its own draft last year, the process in the Senate is progressing slowly.
60 votes are needed to overcome an obstacle in the Senate. This makes it necessary for Republicans to secure the support of at least seven, or even eight or nine, Democratic senators in addition to potential opposition from within their own ranks. This balance gives the Democrats significant bargaining power to postpone the process until after the midterm elections.
In conclusion, according to TD Cowen, the future of the crypto market structure law depends more on the political calendar than on technical preparations. While the industry prefers the regulation to be enacted during the Trump administration, the Democrats want to preserve the room to shape the rules in the event of a possible change of power.
