TD Cowen, an investment bank, predicts that a proposed crypto market structure bill, known as the Financial Innovation and Technology for the 21st Century Act (FIT21), may encounter significant challenges in passing through the current Congress. However, despite the obstacles, the bill's introduction sets the stage for potential legislative efforts in the future.

FIT21, scheduled for a House floor vote later this month, offers a comprehensive regulatory approach to the crypto industry, with a particular emphasis on shifting regulatory oversight to the Commodity Futures Trading Commission (CFTC). Led by Republicans, the bill aims to address various aspects of crypto regulation, but its chances of becoming law in the current Congress are deemed slim by TD Cowen's Washington Research Group.

According to TD Cowen, the Senate Banking Committee's lack of preparation and the Democrats' focus on investor protection issues suggest that FIT21 is unlikely to gain sufficient traction in the Senate. Despite opposition from prominent Democrats such as Rep. Maxine Waters and the relatively muted response from Senate Banking Committee Chair Sherrod Brown, the bill is expected to pass the full House, providing valuable insights into lawmakers' perspectives on critical issues like anti-money laundering and investor protection.

While FIT21 may face an uphill battle in the Senate, TD Cowen views it as a crucial groundwork for future legislative efforts, particularly in 2025/26. By putting House members on record and shifting the focus to the Senate, the bill lays the foundation for potential bipartisan cooperation on crypto market structure legislation in the future.

Moreover, the bill's upcoming vote presents an opportunity to gauge the stance of both Democrats and Republicans on key issues related to digital assets. TD Cowen anticipates FIT21's passage in the House, despite its more challenging path compared to stablecoin regulation legislation.

FIT21's significance lies not only in its potential implications for the crypto industry but also in its bipartisan nature. Rep. Patrick McHenry, a leading proponent of the bill, emphasized its bipartisan nature and the need for regulatory clarity in digital asset markets.

However, uncertainties remain, particularly regarding the future stance of former President Donald Trump on crypto regulation. While Trump has expressed support for crypto, TD Cowen highlights the uncertainty surrounding his future policy stance if he were to win the presidential election later this year. Trump's potential influence on crypto oversight could further complicate bipartisan efforts and polarize the regulatory landscape.

As FIT21 progresses through Congress, TD Cowen closely monitors developments, recognizing the bill's potential impact on the future of crypto regulation and the broader digital asset market.