Election risks intensify: Why US cryptocurrency legislation is forced to be delayed until 2027

Investment bank TD Cowen recently issued a research warning that the U.S. crypto market structure bill has slowed significantly due to the approaching 2026 midterm elections, with political risks intensifying. The bill is more likely to be passed in 2027, with full implementation possibly delayed until 2029. This is not a policy content issue but purely a matter of political timing.

Why the Bill’s Progress Is Stalled

Two bills, one goal

Currently, the cryptocurrency market structure bills discussed in Congress have different names in the House and Senate. The House version is called the “CLARITY Act,” while the Senate counterpart is the “Responsible Financial Innovation Act.” The goal of these bills is to establish a unified federal regulatory framework for U.S. cryptocurrencies and digital assets, seen as an important step in U.S. crypto regulation following the “GENIUS Act.”

The bill was passed in the House in July 2025, but progress in the Senate is uncertain. It is still awaiting review by the Senate Banking Committee and Agriculture Committee.

Political cycle as the biggest variable

TD Cowen’s Washington research team pointed out that the key variable in the legislative process is not the crypto regulation policy itself but the political timing. The 2026 midterm elections could reshape the congressional power structure. The current Republican-led landscape is not yet solidified.

Senate Democrats face the reality that if they believe they have a chance to regain control of the House after the midterms, they have little incentive to push the bill now. Postponing until after the elections could give Democrats greater influence to shape the final regulatory rules.

Conflict of Interest Clauses: The Focus of Bipartisan Battles

Trump Family’s Crypto Connections

In November 2025, the Senate Agriculture Committee released a bipartisan draft bill attempting to address core disputes over conflicts of interest. The draft proposes restrictions on senior government officials, including Trump and his family, holding or directly participating in crypto-related businesses during their tenure.

This clause directly touches on interests of the Trump administration. According to reports, Trump has connections with World Liberty Financial, the “American Bitcoin” mining project, and Trump-branded tokens, reflecting long-standing Democratic concerns about these relationships.

Key to Room for Compromise

To push the bill forward, parties may need to compromise on the effective date. One possible plan is: the bill passes in 2027, but the enforcement of the conflict of interest clauses is delayed until 2029 or after the next presidential inauguration. This approach can advance the bill while avoiding immediate constraints on the current administration.

TD Cowen believes that such a delay might actually provide buffer space for all parties, reducing short-term political friction.

Industry Realities

Although federal legislation is delayed, the advancement of U.S. crypto policy has not completely stalled. The Senate is expected to hold hearings on the market structure bill in January 2026, indicating ongoing discussions.

Significance for the Market

Long-term demand remains unchanged

Despite legislative delays, establishing clear federal rules is still seen as a long-term necessity for the market. Against the backdrop of accelerated overseas regulation and talent outflow from the U.S., a unified regulatory framework is crucial for industry development.

Analyses from Goldman Sachs and others suggest that regulatory clarity will accelerate institutional capital inflows into crypto markets. This means that once the bill is finally enacted, it could unleash institutional demand suppressed by policy uncertainty.

Short-term uncertainty

Political games introduce short-term uncertainty. The market needs to prepare for the potential impact of election results on the final regulatory framework. Different congressional majorities could have substantial influence over crypto regulation directions.

Summary

The delay in U.S. crypto legislation essentially reflects a reality: under democratic systems, political cycles often outweigh policy logic. The uncertainty of the 2026 midterm elections means Democrats lack motivation to push the bill now, and Trump-era officials also have reservations about clauses involving their own interests.

The outcome of this delay game is that the industry must prepare for a long wait. But from another perspective, postponement might also provide more room for negotiation, ultimately leading to a more balanced regulatory framework. The key point is that this is not about policy content but purely about political timing. The market should prepare for the new variables in 2027.