TD Cowen Flags Five Risks to the Clarity Act

TD Cowen’s Washington Research Group identified five specific obstacles that could block passage of the Clarity Act, a Senate bill to clarify crypto rules, in a note from managing director Jaret Seiberg. He set a late July timeline for key steps before Congress leaves for its August recess.

First, the Commodity Futures Trading Commission is operating with a single commissioner, Chair Michael S. P. Selig, limiting the agency’s ability to take on new responsibilities under the bill. Nominating and confirming additional commissioners can take months, and Seiberg wrote that the process would need to begin within four to six weeks to meet the late-July schedule.

Second, regulation of prediction markets could be folded into the Clarity Act. Seiberg warned that lawmakers might expand the bill’s scope beyond sports betting to cover other betting markets, creating concerns about insider trading and potential conflicts tied to the president’s family. “Just the offering on a prediction markets amendment could drive Democrats away from the bill,” he wrote.

Third, the World Liberty Financial token project, which has ties to the Trump family, has drawn scrutiny because early investors reportedly cannot sell tokens until after the president’s term ends. Seiberg said ongoing news about the project could make Democratic support harder to secure.

Fourth, international developments have raised national security and sanctions concerns. Reports that Iran discussed requiring ships to pay tolls in cryptocurrencies to transit the Strait of Hormuz have increased attention on anti-money-laundering safeguards and Bank Secrecy Act provisions. Seiberg observed that Democrats could propose amendments addressing those issues that would be difficult to block. “For instance, we could see a Democrat offer an amendment in response that becomes politically difficult to stop even if crypto platforms see it as poison pill designed to kill the bill,” he wrote.

A fifth potential complication is the Credit Card Competition Act. Seiberg identified senators expected to push to include that legislation in the package and said its inclusion could sink the crypto bill if it gained traction, though he added he does not expect it to pass.

Stablecoin yield rules remain a central technical and political hurdle. Negotiators are discussing a compromise to bar platforms from offering yield on stablecoins they hold on behalf of customers while allowing rewards tied to using stablecoins for payments. Senator Thom Tillis has indicated the Senate Banking Committee is unlikely to vote on the bill until May at the earliest and that final language on stablecoin yield could be released shortly before a markup.

A person familiar with the stablecoin discussions accused banks of delaying the talks and urged a markup to advance the legislation, saying the crypto industry has been negotiating in good faith and needs movement toward a vote.

Seiberg wrote that passage will likely require direct involvement from President Trump and a package of compromises that can win bipartisan support and clear a 60-vote threshold in the Senate. He described the path as difficult and gave a baseline estimate that the bill is unlikely to pass this year, at times placing the odds at roughly one in three and warning the measure could be delayed to 2027 with final rules phased in as late as 2029 if the issues are not resolved.