Upcoming Crypto Bill Vote Pushes Debate to Full Senate as ‘Major Obstacles’ Remain

The upcoming Senate Banking Committee vote on the crypto market structure bill, known as the Clarity Act, is unlikely to guarantee the legislation becomes law, according to investment bank TD Cowen.

The committee is scheduled to vote on the bill on May 14 despite ongoing concerns from banks over stablecoin yield provisions and objections from Democrats regarding the absence of ethics and conflict-of-interest safeguards.

Jaret Seiberg, managing director at TD Cowen’s Washington Research Group, said the vote should be viewed as the beginning of a wider political battle rather than confirmation that an agreement has been reached.

> “It is why we see this vote as shifting the fight to the full Senate rather than as an indicator of a deal,” Seiberg said in a note released on Monday. > > He added: “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 warned that even if the Senate Banking Committee advances the bill through a party-line vote, “major obstacles” still stand in the way of the legislation becoming law.

According to TD Cowen, approval at committee stage would allow the proposal to be merged with a separate version from the Senate Agriculture Committee before broader negotiations begin between Republicans and Democrats in an effort to secure the 60 votes required for passage.

However, Seiberg said disagreements around stablecoin yield remain unresolved.

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

Ethics provisions are also expected to prove a significant hurdle.

Seiberg suggested even some of the Senate’s strongest crypto supporters among Democrats, including Kirsten Gillibrand, may refuse to support the bill unless tougher rules are introduced to prevent senior government officials and their families — including President Donald Trump — from participating in crypto-related businesses.

At the same time, Seiberg said he does not expect Trump to approve legislation that directly targets his family’s crypto interests.

He also pointed to concerns among Democrats that Trump-linked crypto ventures could face future scrutiny if Democrats regain control of the House following the November midterm elections.

> “Senate Democrats realise 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.

Additional sticking points include anti-money laundering rules, Bank Secrecy Act compliance and market manipulation standards.

Seiberg has consistently expressed doubts over whether the bill can pass this year, previously highlighting issues including the lack of commissioners at the Commodity Futures Trading Commission, concerns over Iran’s use of cryptocurrency payments and calls from Republican Senator Thom Tillis for stronger ethics measures.

He has also previously stated that direct involvement from Trump may ultimately be required to move the legislation forward, warning that the bill could slip to 2027, with final regulations potentially not taking effect until 2029 if current hurdles are not resolved.