Investing.com — As the cryptocurrency sector becomes more bullish, TD Cowen urges caution over the possibility of swift legislative action on cryptocurrency market structure and stablecoin regulations. TD Cowen suggests that higher expectations for progress in Congress may be premature and unfounded.
The cryptocurrency industry has been actively lobbying for regulatory clarity, with key figures and entities within the sector expressing optimism about the prospects for significant legislative progress.
Senate Majority Leader Chuck Schumer recently stated that Congress has an “absolute possibility” of passing legislation on cryptocurrency market structure before the end of the year, fueling this optimism.
As a potential vehicle for this progress, Schumer pointed to FIT21, the cryptocurrency market structure bill passed by the House of Representatives, as well as a bill being developed by the Senate Agriculture Committee.
However, TD Cowen analysts point to several reasons for skepticism.
“Crypto entities are aggressively making political contributions. Public Citizen reported on August 21 that crypto companies have contributed $119 million this year, making up 48% of corporate contributions,” the analysts said in a note.
In addition, Fairshake PAC, a major cryptocurrency political action committee, has received some $95 million from industry executives and affiliates. These contributions have certainly influenced legislative priorities, as evidenced by bipartisan efforts to overturn SEC accounting rules opposed by the industry.
Despite this financial clout, TD Cowen warns that optimism within the cryptocurrency sector may be lost.
The note mentions that while Schumer’s comments have raised expectations, his track record suggests that these general promises may not translate into concrete action, particularly as election campaigns intensify. The analysis draws parallels with the cannabis industry in 2022, where similar promises of legislative action during the outgoing session ultimately fell short.
TD Cowen also points to potential political hurdles that could hinder progress. “Our view is that the cryptocurrency industry has also hurt the prospects for legislation this year by spending $12 million to defeat Senate Banking Committee Chairman Sherrod Brown,” the analysts said.
Given Brown’s influential position, his opposition could be a significant barrier to any cryptocurrency-related bills, both this year and potentially in the future, depending on the outcome of his re-election.
Furthermore, TD Cowen expresses skepticism about the outlook for 2025, regardless of the election results. The note mentions that both political parties could try to extract more contributions from the crypto sector before securing legislative victories, which would further delay the process.
