As debates intensify around the long-awaited "Clarity Act," aimed at regulating the cryptocurrency market in the US, a significant deadlock is emerging both politically and within the industry. A recent analysis by investment bank TD Cowen reveals that the obstacles to the bill are not limited to the stablecoin yield debate; industry representatives are calling on the Senate to expedite the process. According to TD Cowen, there are five critical obstacles to the bill. First, there is a staffing shortage at the Commodity Futures Trading Commission (CFTC). The fact that the institution currently operates with only one commissioner makes it difficult to implement the new powers granted to it under cryptocurrency regulation. Making new appointments and completing the approval processes could take months; this is a significant factor hindering the bill's progress before the summer. Secondly, there is the issue of prediction markets. The possibility of including regulation of this area in the bill could create unease among Democrats, particularly due to concerns about insider trading and political conflicts of interest. This situation further complicates the bill's ability to gain bipartisan support.
The third point of contention is the World Liberty Financial project, which is alleged to be linked to former US President Donald Trump. Developments such as restrictions on early investors' token sales related to the project are bringing political ethics debates back to the forefront. The continued media coverage of such issues could cause Democrats, in particular, to approach the bill with caution.
The fourth element is geopolitical risks. News that Iran is taking steps to accept crypto payments could lead to further tightening of the Anti-Money Laundering (AML) and Bank Secrecy Act (BSA) provisions in the bill. This increases the risk of additional regulations being included in the bill that could be seen as a "poison pill" for the sector.
Finally, the possibility of adding a separate regulation on credit card competition to this bill is a significant uncertainty. Although the passage of this provision is considered unlikely, it is seen as a factor that could completely derail the process.
Stablecoin consensus takes shape, uncertainty remains
On the other hand, the issue of stablecoin returns remains central. Current compromise efforts are shaping up to prohibit platforms from offering direct returns on stablecoin balances while allowing rewards tied to payment usage. However, the fact that this text is not yet finalized maintains uncertainty. The Senate Banking Committee is expected to vote on the bill as early as May.
In this uncertain environment, the crypto sector has increased pressure for faster action. A broad coalition of 75 institutions, led by the Crypto Council for Innovation and the Blockchain Association, emphasized in a letter sent to the Senate that the process should not be delayed. The signatories, including major companies such as Coinbase, Ripple, and Uniswap Labs, state that the US is facing the risk of falling behind in global competition.
According to sector representatives, the lack of a comprehensive regulatory framework could lead to investments and innovation shifting outside the US. The institutions also argue that regulatory guidance alone is insufficient; clear and binding laws are necessary.
