TD Cowen Flags Prolonged Path for U.S. Crypto Market Structure Bill

The U.S. crypto regulatory landscape remains in flux as lawmakers deliberate the CLARITY Act, a comprehensive market structure bill aimed at defining oversight between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The bill faces unresolved challenges, including how to regulate decentralized finance (DeFi) and whether a federal 'Crypto Czar' should coordinate policy across agencies according to Whale Insight. These debates are occurring in the context of a broader regulatory shift, with new leadership at the SEC and the Federal Reserve creating a more crypto-friendly environment as reported by CoinDesk.

The House passed the CLARITY Act in July 2025, but its Senate counterpart remains in negotiation. Senate Banking Committee and Senate Agriculture Committee drafts are now on the table, and leadership has signaled plans for early-2026 markups. The narrow time window before the mid-term elections adds pressure for a timely resolution according to Whale Insight.

Legislative momentum is also evident in stablecoin developments, with the GENIUS Act setting a global standard for compliant tokens. By the end of 2025, stablecoins reached a market cap of $250 billion, representing over 30% of on-chain transactions according to Investing.com.

The Federal Deposit Insurance Corporation (FDIC) has also proposed a pathway for banks to issue dollar-pegged stablecoins, underlining growing institutional engagement as noted by CoinTelegraph.

Why Did This Happen?

The U.S. crypto market structure bill has become a critical legislative priority due to its role in defining the legal and operational boundaries for digital assets. The lack of clear oversight between the SEC and CFTC has created regulatory uncertainty, deterring institutional adoption and slowing innovation according to CoinDesk.

Goldman Sachs recently noted that regulatory clarity is the biggest catalyst for institutional crypto adoption. The bank highlighted that U.S. market structure legislation could unlock tokenization and DeFi, making the sector more attractive to large investors as reported by CoinDesk.

The political landscape also plays a key role. President Donald Trump has made promoting the U.S. crypto industry a central policy goal, a stance that SEC chair Paul Atkins has echoed. However, concerns over potential conflicts of interest and regulatory fragmentation continue to complicate negotiations according to Whale Insight.

What Are Analysts Watching Next?

Market participants are closely following the Senate's progress on the CLARITY Act. A key hearing in the Senate Banking Committee is scheduled for January 15, which could set the stage for a full Senate debate by mid-2026 according to Blockchain Magazine. The outcome will determine whether the bill can pass before the mid-term elections, a timeline that lawmakers are under pressure to meet according to Whale Insight.

Meanwhile, stablecoin frameworks are nearing implementation. The Treasury and FDIC are finalizing rules under the GENIUS Act, with formal regulations expected in early 2026 according to Blockchain Magazine. These developments are expected to provide clarity for banks and financial institutions looking to issue and custody stablecoins as reported by CoinTelegraph.

In addition to federal efforts, states like California and Texas are implementing their own crypto regulations. California's new Digital Financial Assets law, which requires licensing for firms serving residents, will take effect in July 2026 according to Blockchain Magazine. Texas, on the other hand, has established a state-managed Bitcoin reserve fund, with purchases planned to begin in 2026 according to Blockchain Magazine.

What Could Happen Next?

The regulatory landscape will likely continue to evolve in 2026, with a focus on balancing innovation with investor protection. The SEC's planned 'innovation exemption' in January 2026 could allow crypto startups to test new products under reduced regulatory requirements, fostering experimentation while maintaining oversight according to Blockchain Magazine.

At the same time, institutional adoption of crypto infrastructure is expected to accelerate. With spot Bitcoin and Ethereum ETFs generating strong inflows in early 2026, the market is signaling growing confidence in regulated crypto products according to The Block. This trend could encourage more institutional players to enter the market, further driving demand for clear regulatory frameworks as reported by CoinDesk.

Despite these positive developments, challenges remain. The market's Sharpe ratio for Bitcoin has turned negative, suggesting that it may be entering a bearish phase according to TradingView. If Bitcoin's price struggles to regain momentum, it could impact broader crypto adoption and regulatory momentum. Market participants will be watching for signals that the market is stabilizing before committing to larger investments as reported by CoinEdition.