Clarity Act Passage Unlikely in 2025, TD Cowen Warns

TD Cowen has lowered the probability that the Clarity Act will pass this year, citing a worsening political environment around the bill. The investment bank’s Washington research team delivered the assessment, shifting the baseline for US crypto regulation and forcing market participants to recalibrate expectations for legislative progress in 2025.

The Clarity Act is the most concrete attempt at a federal framework for digital asset classification and exchange registration. Without its passage, the regulatory vacuum persists. The SEC and CFTC continue to dispute jurisdiction. State-level licensing remains fragmented. Institutional capital faces legal uncertainty. TD Cowen’s view suggests that bipartisan support has eroded enough to stall the bill through the current session.

TD Cowen’s Political Assessment

The bank’s analysts point to a deteriorating political climate rather than a single legislative hurdle. The Clarity Act has faced growing opposition from progressive Democrats who want stricter consumer protections and from libertarian-leaning Republicans who reject new federal authority over crypto. TD Cowen sees these crosscurrents intensifying as the 2025 midterm cycle approaches.

This is not a prediction of outright defeat. The bill could still move in a lame-duck session or be attached to a must-pass vehicle. TD Cowen’s downgrade in probability signals that the path of least resistance now runs through delay. For traders and allocators, the implication is clear: do not build a thesis around near-term legislative clarity.

Why the Clarity Act Matters Now

The Clarity Act is the most concrete attempt at comprehensive crypto legislation in the current Congress. Its failure would leave the market exposed to enforcement-driven regulation. The SEC has pursued multiple high-profile actions against exchanges and token issuers. The CFTC has limited authority over spot markets. Without a statutory framework, companies face conflicting guidance from regulators and courts.

The stakes are highest for US-based crypto firms and tokens with significant domestic exposure. Exchanges like Coinbase and Kraken have publicly lobbied for the bill, arguing that clear rules would unlock institutional participation. A stalled Clarity Act prolongs the uncertainty that has driven some projects to relocate offshore. The Hong Kong Crypto Advisors Face HKD 5M Capital Rule and the UK Sanctions HTX Under First Crypto Exchange 17A Designation illustrate how other jurisdictions are moving ahead with their own frameworks while the US remains in limbo.

The Decision Point for Crypto Markets

TD Cowen’s call creates a concrete decision point for anyone positioning around US regulatory catalysts. If the Clarity Act is truly dead for the year, the next meaningful legislative milestone is the 2026 session. That timeline pushes the regulatory narrative into 2027 at the earliest, given the typical legislative calendar.

What would confirm TD Cowen’s view? A failure to attach the bill to any year-end spending package or a public statement from leadership that the bill lacks the votes. What would weaken it? A surprise markup in committee or a bipartisan compromise on a narrower version. Until then, the default assumption should be that the political environment continues to deteriorate.

For now, the market’s attention shifts to the SEC’s enforcement agenda and the CFTC’s rulemaking as the primary drivers of US crypto policy. The OCC Orders Sponsor Bank for Wise, Crypto.com to Fix AML Program and the Binance OMS Toolkit Deepens Institutional Single-Point Risk are reminders that regulatory pressure is not limited to legislation. Traders should watch for any shift in agency leadership or congressional oversight hearings that could alter the trajectory.

The Clarity Act is not dead. TD Cowen has made a clear call: the probability of passage this year is low. That fact is worth incorporating into any watchlist that depends on US regulatory clarity as a catalyst.