The reform of the crypto market structure in America remains pending: the true meaning of the regulatory showdown bottom

The regulatory battle around the structure of the crypto market in the United States is dragging on far beyond initial expectations. According to TD Cowen’s analysis, the Responsible Financial Innovation Act—known as CLARITY in the House—may not see approval before 2027, with final rules expected to come into effect in 2029. This means that the crypto industry’s hopes for clear regulation are clashing with a more complicated political reality.

Democrats in the Senate slow down the bill: the bottom line of regulatory reform

The true bottom line of the situation lies in the Democrats’ reluctance to proceed quickly. It’s not just bureaucratic delays: TD Cowen’s Washington team warns that Democratic Senators might abandon bipartisan support before the midterm elections scheduled for November 2026. Electoral battles have historically slowed financial reforms. The parallel with the 2010 Dodd-Frank crisis is illuminating: when midterm elections flipped the House, lobbying wars blocked any legislative progress for months.

The Trump knot and conflicts of interest paralyze negotiations

The real obstacle concerns conflicts of interest related to the Trump family and their activities in the crypto sector: World Liberty Financial, American Bitcoin mining, and the recent Official Trump memecoin. Democrats included in bipartisan drafts specific provisions that would prohibit federal officials and their relatives from holding digital assets or serving in the industry. This clause has become an insurmountable point of friction in legislative dialogue.

The situation is further complicated by controversy surrounding the CEO of a well-known exchange platform who received a presidential pardon. These developments have muddied the waters further, prompting legislators to adopt a wait-and-see stance until the political landscape stabilizes.

2026 elections: the turning point for the bill

The Senate Banking and Agriculture Committees are reviewing revisions, with the Banking Committee potentially resuming work in mid-January. The crucial turning point remains the outcome of the midterm elections. If Democrats retain control, the legislative process could resume with a new power configuration. If they lose the Senate, the game changes completely.

TD Cowen predicts that time will resolve current tensions: approval in 2027 would allow the frustrations of the Trump era to naturally dissipate. The crypto community, according to analysts, will accept presidential modifications, while Democrats might abandon old conflict clauses in exchange for other concessions.

The transfer of power: from the SEC to the CFTC

If the bill is approved, it would mark a significant change in regulatory sovereignty. The Commodity Futures Trading Commission would gain greater authority over digital assets and spot markets, while the Securities and Exchange Commission would see its control reduced. Both agencies are currently composed exclusively of Republicans, following Caroline Crenshaw’s departure from the SEC and in the absence of Democratic nominations from Trump.

This realignment reflects a different vision of how to regulate the sector: the CFTC manages futures and derivatives, while the SEC oversees securities-related issues. For the industry, this means potentially more favorable rules, but the framework remains uncertain until elections clarify the balance of power.

Lessons from the Libra collapse in 2019

History teaches how electoral tensions can be destructive for major projects in the sector. In 2019, Facebook announced Libra, a global stablecoin promising to revolutionize international payments. The initial consortium included 28 top companies, but the project quickly disintegrated under congressional hearings and fears of money laundering and Big Tech’s excessive power.

Regulators worldwide moved in sync to block the initiative. The project transformed into the more innocuous Diem in 2020, before Facebook completely abandoned it in 2022 after years of frustrating delays. The Libra saga demonstrates how election cycles amplify regulatory anxieties and how a political push can cause major industry projects to wither.

What to expect in the coming months

The road ahead remains uncertain. The revisions scheduled for January are a crucial test for the short-term feasibility of legislation. However, analysts agree that the first real turning point will be November 2026. Lawmakers are dealing not only with regulatory complexities but also with electoral calculations that determine who will hold power after the votes.

If approval is delayed until 2027, followed by implementation in 2029, it would be a long wait for a sector seeking stability. However, according to TD Cowen, this delay could paradoxically favor the achievement of a more lasting consensus, as it would allow current controversies to subside and legislators to reach compromises that will survive changes in administration.