Senator Tillis’s push for ethics provisions has become the ‘latest hurdle’ for cryptocurrency legislation, says TD Cowen.

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Republican Senator Thom Tillis’ push to include ethics provisions in the Clarity Act has become the “latest obstacle” to cryptocurrency legislation, investment bank TD Cowen said.

Tillis, a member of the Senate Banking Committee, reportedly said Monday that he would oppose the cryptocurrency bill if it did not include ethical language. “There has to be ethical language in the bill before it leaves the Senate or I will be one of the people negotiating the bill to vote against it,” Tillis told POLITICO.

The ethics concerns raised by Tillis are the latest obstacle to cryptocurrency legislation.

“This is an issue that likely applies to the Trump family,” Jarrett Seiberg, managing director of TD Cowen’s Washington research group, said in a note Monday. “We don’t see Tillis stepping down because he won his battle with the president on the Fed issue.”

Tillis said Sunday he would support Kevin Warsh as the next Federal Reserve chairman. He previously blocked a vote on Wash’s nomination due to the Justice Department’s investigation into current Federal Reserve Chairman Jerome Powell, whose term ends May 15. The investigation was suspended on Friday.

TD Cowen said Tillis’ opinions on ethics issues are important given his influence on the outcome of the bill. Tillis has been a key negotiator on the cryptocurrency bill on the issue of stablecoin yields, and last week asked Banking Committee leadership to delay raising the bill until May.

“Tillis has tremendous influence over the future of the Clarity Act, and these comments suggest he is willing to use that power,” Seiberg said. “We continue to question the market consensus that Congress should pass the Clarity Act this year.”

Cryptocurrency bill delay

Many in the market expect the bill to pass this year, but Seiberg reiterated that there are still major hurdles with no easy solutions.

Arguments in favor of the bill include the growing political influence of the cryptocurrency industry, Republican plans to make the U.S. the global cryptocurrency capital, and possible benefits for business interests associated with the Trump family. Seiberg said he agrees with these points but does not believe the bill will necessarily pass this year.

Creating ethics or conflict of interest clauses is also difficult. Applying the rule only after the next president takes office could avoid impacting the Trump family, but Seiberg said it’s unlikely Democrats or Tillis will embrace that approach. At the same time, imposing restrictions that affect current business interests may be difficult for Trump to accept.

Seiberg also pointed out that Tillis is not seeking re-election, which may reduce political pressure to align with Trump. “This appears to be an existing problem with Tillis: He wants to make sure that government officials, including the president, cannot profit from the cryptocurrency sector that the bill will be pushing forward,” Seiberg said.

Overall, Seiberg said passing the Clarity Act will not be easy.

“Like anything political, there can be negotiation if there is a desire to find a solution,” he said. “But our point is that this is not as simple as it seems. There is still real work to be done on the legislation.”

Seiberg previously pointed out five other obstacles to the bill in addition to the main stablecoin yield issue, including a lack of CFTC commissioners, conflicts involving Trump-linked cryptocurrency project World Liberty Financial, and concerns about Iran’s use of cryptocurrency payments.

Seiberg has previously said that passage of the bill would require Trump’s personal involvement, along with a compromise that could win bipartisan support and pass the 60-vote threshold in the Senate. Last month, he said he was “increasingly pessimistic” and said there was only a one-in-three chance of a cryptocurrency bill being passed this year. He previously said that if the issues were not resolved this year, the bill could be delayed until 2027, with final regulations likely to take effect in 2029.

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