Upcoming crypto bill vote shifts fight to full Senate, ‘major obstacles’ remain TD Cowen says

The upcoming vote on the crypto market structure bill, or Clarity Act, on May 14, does not mean the bill will become law, according to investment bank TD Cowen.

The Senate Banking Committee on Friday officially scheduled the long-awaited vote on the crypto bill despite objections from banks over the treatment of stablecoin yield and from Democrats over the lack of ethics or conflict-of-interest provisions.

“It is why we see this vote as shifting the fight to the full Senate rather than as an indicator of a deal,” Jaret Seiberg, managing director at TD Cowen’s Washington Research Group, said in a note on Monday.

“This is a smart political move as time is running short, as we believe the full Senate must vote before the August recess for the bill to be enacted this year,” Seiberg added.

Even if the Banking Committee passes the bill in a party-line vote, it does not mean the legislation will become law because “major obstacles” remain, Seiberg reiterated.

Crypto bill obstacles

Advancing the bill out of the Banking Committee would allow it to be combined with the Senate Agriculture Committee version of the legislation, Seiberg said. Senate leaders could then begin negotiations with Democrats and Republicans to determine what changes are needed for the combined package to secure the 60 votes required for passage, he added.

“What this does not do is end the policy differences that have stalled the bill in Senate Banking for nearly a year. We continue to struggle to see how one reaches a deal on stablecoin yield that can satisfy Coinbase, other crypto interests and the banks,” Seiberg said.

“Instead, the senators will need to pick a winner between these powerful interests. Congress typically avoids such decisions,” he added.

Ethics or conflict-of-interest provisions are an even bigger hurdle for the bill, Seiberg said.

Even the “staunchest pro-crypto” Democrats in the Senate, like Sen. Kirsten Gillibrand, are unlikely to back the bill if it does not prevent top government officials and their families — including President Donald Trump — from being involved in crypto businesses, Seiberg said.

At the same time, Seiberg said he does not expect Trump to sign a bill that targets his family’s crypto businesses.

Seiberg also pointed to growing concerns that if Democrats retake the House after the November midterm elections, Trump-linked crypto businesses could face investigations.

“Senate Democrats realize this and are unlikely to want to be seen approving of potential conflicts by voting for Clarity [Act] unless it has tough conflict-of-interest language,” Seiberg said.

Other unresolved issues remain as well, including anti-money laundering, Bank Secrecy Act, and market manipulation standards, Seiberg noted.

Seiberg has remained skeptical about the bill’s passage this year. Beyond the above issues, he has pointed to several other hurdles in recent weeks, including a lack of Commodity Futures Trading Commission commissioners, concerns around Iran’s use of crypto payments, and Republican Senator Thom Tillis’ push for ethics provisions.

Seiberg has previously said that passing the bill will likely require personal involvement from Trump, and that the bill could be delayed to 2027, with final rules potentially taking effect in 2029 if hurdles are not resolved this year.

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