U.S. Bank Warns: The CLARITY Act Is Collapsing — Crypto Industry on the Brink of Chaos

Tensions in Washington are rising — and with them, anxiety across the crypto world.

The U.S. government shutdown, political infighting, and the upcoming election season have thrown the most important crypto bill since the GENIUS Act into chaos. According to a new report from investment bank TD Cowen, the CLARITY Act, a landmark proposal meant to establish a clear regulatory framework for digital assets, is now stuck in legislative limbo. Worse yet, its approval could be delayed until after the 2026 midterm elections.

When Politics Meets Crypto TD Cowen warns that budget gridlock and the government shutdown have slowed down nearly every legislative effort — including those aimed at clarifying crypto regulations. The delays affect not only the CLARITY Act but also pending altcoin ETFs, such as those for XRP and Solana (SOL), which are waiting for SEC approval amid administrative paralysis. “Things are not looking good,” the bank said, citing deep divisions between Republicans and Democrats. Negotiations over the CLARITY bill have reportedly stalled due to political infighting, just as the market desperately needs legal certainty.

A Behind-the-Scenes Power Struggle TD Cowen highlights the biggest roadblock to the bill’s passage — a Democratic demand to ban President Donald Trump, his family, and other senior officials from holding ownership stakes in crypto companies.

That provision has become a political flashpoint, halting progress altogether. “We’re not saying there’s zero chance of progress in the next 12 months,” the bank noted.

“But right now, there are more incentives to delay than to act quickly.” In other words, while a breakthrough is possible, the political climate favors procrastination over progress.

CLARITY vs. GENIUS: Two Different Worlds While the GENIUS Act, passed in early 2025, focused mainly on stablecoins and limited aspects of crypto finance, the CLARITY Act aims to create a comprehensive framework that would finally define: 🔹 The roles of the SEC and CFTC 🔹 The concept of “secondary assets” 🔹 And the criteria for when a token qualifies as a security This legislation would unify America’s fragmented regulatory landscape, which today resembles a patchwork of conflicting rules.

Crypto Market Stuck in Limbo The continued delay could have far-reaching consequences.

Without a legal framework, altcoins, DeFi platforms, and crypto banks remain in regulatory gray zones — leaving investors and companies hesitant to commit capital. Meanwhile, other countries — from Europe to Japan — are forging ahead with their own clear crypto laws.

The U.S., once the global leader in financial innovation, now risks falling behind.

A Glimmer of Hope The U.S. House of Representatives approved the CLARITY Act in July 2025, but the bill is now stalled in the Senate.

Analysts at TD Cowen say there’s still a chance for progress within a year — especially if crypto ETFs and rising institutional inflows increase pressure on lawmakers to act.

Summary The CLARITY Act was supposed to be the next big step after the GENIUS Act, providing long-awaited regulatory certainty for digital assets.

Instead, it’s become a victim of political gridlock, election-season chaos, and bureaucratic inertia.

For now, one truth remains:

Crypto continues to grow in the U.S. — but without clear rules, in a country still unsure what it wants to do with it.

#CLARITYAct , #crypto , #Regulation , #BTC , #altcoins

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