Political bargaining around crypto: what is really happening with the CLARITY Act

The adoption of the CLARITY Act, which is intended to establish a unified and clear regulatory architecture for the cryptocurrency market in the United States, is highly likely to be significantly delayed. According to analysts’ estimates, the timeline is no longer measured in months but in years: formal approval of the document may not take place before 2027, and its full implementation in practice could stretch as far as 2029. The reason lies in a combination of political conflicts, electoral tactics, and fundamental disagreements between Democrats and Republicans.

As reported by The Block, citing an analytical note from TD Cowen experts, discussions around the framework bill on the structure of the U.S. cryptocurrency market have entered a phase of prolonged political bargaining. Despite the fact that the technological and regulatory foundation of the document has been under development for several years, the political factor has now become the key obstacle.

One of the main reasons for the delay, analysts say, is the strategy of the Democrats, who aim to regain control of the House of Representatives in the midterm elections in the fall of 2026. As the election campaign approaches, crypto regulation becomes not just an economic issue but a politically sensitive one. For the “blue” camp, it is an opportunity to strengthen their positions; for Republicans, it is a risk of making concessions that could later be used against them in the electoral fight.

At the same time, TD Cowen Managing Director Jaret Seiberg allows for an alternative scenario. According to him, the parties could theoretically reach a compromise, opening the way for approval of the bill at the end of 2026 or at the beginning of 2027. This is possible because the technical part of the CLARITY Act – the classification of digital assets, the delineation of regulators’ authorities, and the basic rules of market operation – has already been worked out quite thoroughly. However, the political superstructure built on this foundation remains highly contentious.

The key stumbling block has become the conflict-of-interest provision. Democrats insist on a strict restriction: the U.S. president and the country’s top officials should not own crypto assets or control businesses related to digital currencies. From their perspective, without such a provision, any crypto market law would be perceived as potentially biased and undermining trust in regulation.

For Donald Trump, such wording is fundamentally unacceptable. According to Financial Times data, companies linked to him and members of his family have earned more than $1 billion from various crypto projects amid active support for the industry at the federal level. Introducing a direct ban would effectively mean political and financial self-restraint that Trump is not prepared to accept.

One compromise option discussed among experts is a delayed entry into force of the conflict-of-interest rule. As Seiberg explained, this would mean making the provision effective only three years after the law is adopted. In that case, its application would fall under the next presidential term and therefore would not affect Trump. However, according to TD Cowen analysts, Democrats are unlikely to agree to such a scheme unless a similar delay is applied to the rest of the bill as well. In practice, this would amount to freezing the entire CLARITY Act for several years, depriving the compromise of any practical meaning.

It is important to note that some progress in the legislative process has already been made. A version of the U.S. crypto market structure bill prepared by the House of Representatives was passed as early as the summer of 2024. After that, several alternative versions emerged in the Senate at the level of relevant committees, reflecting different approaches to regulating digital assets. However, it was precisely at the Senate stage that the document encountered the greatest political disagreements.

In early December 2025, Senate Democrats sent Republicans an official list of their demands, with the conflict-of-interest provision once again being the key point. After that, Congress went into the Christmas recess without coming any closer to a compromise.

The prospects for a quick return to the discussion also appear weak. The adoption of the CLARITY Act as early as January 2026 is considered unlikely, as the Senate will be focused on a more urgent issue – preventing a potential government shutdown. At the end of January, the temporary funding deadline expires, and this issue will become lawmakers’ top priority.

As a result, the market receives yet another signal of uncertainty. Instead of clear rules of the game, the U.S. crypto industry will continue to operate under a fragmented regulatory regime, where key issues are resolved through courts, agency interpretations, and targeted regulatory initiatives. For investors and companies, this means continued legal uncertainty at least until 2027, and possibly longer.

Thus, the CLARITY Act, intended to bring order to one of the world’s most dynamic markets, has itself become a hostage to political turbulence. The irony is that a law designed to provide clarity and structure risks remaining in limbo precisely because of the lack of political clarity.