Investment banks warn of rising election risks in 2026; key US crypto legislation may be delayed until 2027

Investment bank TD Cowen recently issued a research warning that as the 2026 US midterm elections approach, a key legislation aimed at establishing a unified regulatory framework for US cryptocurrencies and digital assets is facing significant political resistance. The pace of progress may slow considerably or even be delayed until after 2027.

TD Cowen’s Washington research team pointed out that the cryptocurrency market structure bill currently under discussion in Congress is called the “CLARITY Act” in the House of Representatives and the “Responsible Financial Innovation Act” in the Senate. Although the bill passed the House in July, the uncertainty of its advancement in the Senate is increasing due to the election cycle. The firm expects the bill is more likely to be passed in 2027, with full implementation possibly delayed until 2029.

Analysis suggests that the 2026 midterm elections could reshape the power structure of Congress, which is currently dominated by Republicans and not yet solidified. In this context, some Democratic senators may choose to delay support until election results become clearer. TD Cowen pointed out that the key variable in the legislative process may be political timing rather than the specific content of cryptocurrency regulation policies.

Notably, a bipartisan draft previously released by the Senate Agriculture Committee attempts to address core disputes surrounding conflicts of interest. The draft proposes restrictions on senior government officials, including Donald Trump and his family, from holding or directly participating in cryptocurrency-related businesses during their tenure. This clause reflects Democrats’ longstanding concerns about Trump’s connections to the crypto industry, including his associations with World Liberty Financial, the “American Bitcoin” mining project, and Trump-branded tokens.

TD Cowen believes that delaying the passage of cryptocurrency legislation could provide a buffer for all parties, reducing short-term political friction. If the bill is passed in 2027 and takes effect in 2029, Democrats may need to accept the reality that some provisions are not retroactive, and the industry will need to adapt to the potential impact of election results on the regulatory framework.

Currently, the “Responsible Financial Innovation Act” is still awaiting review by the Senate Banking Committee and Agriculture Committee. Although some industry insiders believe that passing a comprehensive US cryptocurrency regulatory framework before 2026 will be challenging, the acceleration of overseas regulation and the outflow of US crypto talent make establishing clear federal rules still a long-term market necessity.