TD Cowen Says Clarity Act Faces Uncertain Path Before US Midterm Elections
Investment bank TD Cowen believes the Clarity Act, a proposed U.S. crypto market structure bill, still faces significant political and legislative challenges. While the Senate is expected to begin reviewing the bill in July, analysts say its approval before the November 2026 midterm elections remains uncertain.
The firm warned that political disagreements, ethics concerns, and opposition from the banking industry could delay the legislation.
Senate Expected to Review the Clarity Act in July
According to Jaret Seiberg, Managing Director at TD Cowen’s Washington Research Group, the Senate could begin considering the Clarity Act during the week of July 13.
Senate Majority Leader John Thune is expected to launch the procedural process that could lead to a Senate floor vote either that week or during the following week.
However, Seiberg said the legislative timetable remains tight. July 24 is viewed as an important deadline before the House of Representatives begins its August recess.
If lawmakers fail to advance the bill before then, its chances of passing later in the year may decline significantly.
Political Uncertainty Clouds the Bill's Future
TD Cowen believes one of the biggest uncertainties is whether President Donald Trump would ultimately sign the legislation.
According to Seiberg, Democratic lawmakers are expected to introduce amendments that could force Republicans into politically difficult votes. Republican senators may hesitate unless they are confident the president supports the final version of the bill.
Analysts noted that uncertainty increased after Trump recently declined to sign a housing bill negotiated by his own administration. He has also stated that he will not approve additional legislation until Congress passes the Safeguard American Voter Eligibility (SAVE) Act.
Although Trump could make an exception for the Clarity Act, TD Cowen said there is no guarantee.
Ethics Proposal Could Create Additional Challenges
Another major issue involves proposed ethics rules.
Democratic lawmakers want to ban government officials and their immediate family members from owning crypto businesses. The proposal would also apply to the president.
Seiberg said there is little indication that Trump is willing to support such restrictions. As a result, Republican senators may need to reject the amendment, and it remains unclear whether enough votes exist to do so.
TD Cowen identified several key Republican senators whose positions could influence the outcome, including Thom Tillis, Mitch McConnell, Bill Cassidy, John Cornyn, Susan Collins, and Lisa Murkowski.
Law Enforcement Raises Concerns Over Crypto Provisions
Law enforcement officials have also expressed concerns about parts of the legislation.
The White House is reportedly holding discussions on whether software developers should be held responsible if blockchain tools they create are later used for money laundering or other illegal activities.
Last week, several law enforcement organizations warned that Section 604 of the Clarity Act, also known as the Blockchain Regulatory Certainty Act (BRCA), could weaken oversight by protecting certain non-custodial software developers.
Officials argued that the provision may make it more difficult to investigate and prosecute crypto-related financial crimes.
Banks Continue to Oppose Stablecoin Provisions
TD Cowen does not expect lawmakers to modify the bill’s stablecoin yield provisions.
Because of this, the banking industry is expected to maintain its opposition to the legislation.
According to Seiberg, the crypto industry appears confident that the bill can still gain enough support despite resistance from traditional financial institutions.
Analysts Lower Expectations for 2026 Approval
TD Cowen is not alone in expressing caution over the bill’s prospects.
Recently, Galaxy Research reduced its estimate of the Clarity Act becoming law in 2026 from 60% to 50%, citing limited Senate time and legislative scheduling challenges.
Earlier this month, JPMorgan analysts also estimated that the bill has less than a 50% chance of passing this year. They pointed to the approaching midterm elections, ongoing debate over stablecoin regulations, and unresolved political issues.
Conclusion
The Clarity Act remains one of the most closely watched pieces of U.S. crypto legislation, but its future is far from certain. Political disagreements, ethics debates, law enforcement concerns, and banking opposition continue to complicate its path through Congress. As the Senate prepares to review the bill, the coming weeks could determine whether the legislation advances before the 2026 midterm elections or faces another delay.
