U.S. Crypto Rules Face Years of Delay as Politics Take Control

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Overview

• Crypto market structure legislation may not pass until 2027, with implementation extending to 2029, according to TD Cowen analysis
• Political disputes over ethics provisions and agency jurisdiction continue to delay lawmaking
• Prolonged uncertainty may push crypto innovation and liquidity overseas to jurisdictions with clearer frameworks

Legislative Timeline and Political Dynamics

U.S. legislation designed to establish clear rules for crypto markets faces prolonged delays, with passage potentially pushed to 2027 and implementation extending into 2029, according to TD Cowen. The firm noted that political dynamics in Congress now outweigh market urgency, even as global crypto infrastructure continues to mature.

TD Cowen’s Washington Research Group indicated there remains a narrow path for a crypto market structure bill to pass this year. However, shifting political incentives make delays more likely. Democrats may see limited reason to accelerate talks if they believe control of the House could change after the 2026 midterm elections.

Managing director Jaret Seiberg noted that election outcomes remain uncertain, which could still encourage compromise. Congressional staff have worked on technical language for months, allowing for a deal to move quickly if political conditions align. However, time now favors a slower timeline, with the bill’s most difficult issues potentially fading if Congress passes it in 2027 and sets enforcement for 2029.

Political Obstacles: Conflict-of-Interest and Agency Disputes

Conflict-of-interest language stands as a major obstacle to faster progress. TD Cowen indicated Democrats are likely to seek provisions barring senior officials and their families from owning or operating crypto businesses. These restrictions would require effective date delays of several years, as Seiberg described the language as a “nonstarter” under current timelines.

Beyond ethics, lawmakers continue to debate which agency should oversee crypto markets. Congress remains split over whether authority should rest with the Securities and Exchange Commission or the Commodity Futures Trading Commission. Disagreements over decentralized finance rules add further complexity.

Market Impact: Regulatory Uncertainty and Capital Flight

While U.S. regulators have issued incremental guidance through SEC custody guidelines and tokenization pilot programs, TD Cowen noted these steps fall short of a comprehensive statutory framework. Without clear definitions of asset classification or exchange standards, firms face legal ambiguity that complicates product launches and limits institutional participation.

Europe and parts of Asia have moved faster to attract digital asset businesses by offering legal certainty that supports innovation and capital deployment. The U.S. political stalemate has delayed broader market structure legislation, creating competitive disadvantages.

TD Cowen warned that prolonged uncertainty could slow infrastructure investment in the United States, with some firms potentially redirecting innovation toward jurisdictions offering clearer regulatory rules. While stablecoin legislation marked progress earlier in 2025, lawmakers have not resolved broader questions around crypto market structure, requiring firms to plan around multiple election cycles.