TD Cowen, a prominent US investment bank, has indicated that the Clarity Act—a bill aimed at establishing comprehensive federal regulation for the country’s cryptocurrency markets—faces significant legislative hurdles and only a limited chance of becoming law this fall.
Clarity Act faces legislative delays
Lawmakers postponed a highly anticipated vote on the Clarity Act, originally expected before Congress’s five-week August recess. The rescheduled vote is now set for September, further complicating the bill’s passage.
Analysts at TD Cowen stated in a research note that the bill now has a 25% probability of passing in September. The firm estimated a 75% probability that the Clarity Act will not become law this fall due to ongoing partisan disputes.
“The bill is not dead, but the path forward is harder. We assign a 75% probability that Clarity fails to become law this fall,” TD Cowen analysts explained.
Obstacles in the Senate
TD Cowen outlined possible scenarios for the bill’s Senate journey. One scenario involves initial approval of cloture—the Senate’s procedure for ending debate on legislation—but then Republicans opposing Democratic amendments regarding ethics and anti-money laundering measures. This could lead Democrats to block the second cloture vote, preventing final passage.
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AAPLThe bank also said it was plausible that there may be no cloture vote at all, leaving the bill in legislative limbo.
Mini dictionary: Cloture, a procedure in the US Senate that allows the body to limit further debate on a bill and bring it to a final vote.
Political tensions and industry support
The Clarity Act, which passed the House of Representatives last year, is the product of bipartisan efforts; however, partisan conflicts have intensified in the Senate. Some Republican legislators have accused Democrats of deliberately delaying the bill, while prominent Democrats such as Senator Elizabeth Warren have voiced concerns regarding potential benefits to the president and his family.
The current draft bans government officials from promoting or profiting from cryptocurrencies, in an effort to address ethical concerns. This provision was crafted through bipartisan negotiations and began circulating in July.
Some major financial firms, including Goldman Sachs and Fidelity, along with law enforcement groups, have publicly supported the Clarity Act, underlining the bill’s significance to both traditional and digital asset markets.
| Scenario | Chance (According to TD Cowen) | Details |
|---|---|---|
| Clarity Act passes | 25% | Senate schedules vote, survives debate, passes and becomes law |
| Clarity Act fails | 75% | Stalled by disagreements, either via cloture failure or other procedural hurdles |
The outcome remains uncertain as lawmakers return from recess, with the bill’s future largely dependent on negotiations in the Senate and potential compromises between parties.
