Investment bank TD Cowen predicts that heightened political spending ahead of the 2024 U.S. elections could significantly enhance the chances of passing a stablecoin regulation bill this year. According to a recent note from TD Cowen's Washington Research Group, political contributions have already influenced regulatory approvals and legislative progress in the crypto sector, and this trend may continue to favor new cryptocurrency regulations.

Pro-crypto super political action committees (PACs), such as Fairshake PAC and its affiliates, have amassed over $100 million for the upcoming elections, as reported by consumer advocacy group Public Citizen. This financial influence is seen as a driving force behind the Securities and Exchange Commission's (SEC) recent approval of eight spot Ethereum exchange-traded funds (ETFs) and the U.S. House of Representatives' passage of a comprehensive crypto market structure bill.

"We believe this monetary heft helps explain why the SEC approved Ether ETFs and why the House overwhelmingly passed crypto market structure legislation," wrote Jaret Seiberg, head of TD Cowen's Washington Research Group. "We see this as positive for the stablecoin bill this year and market structure in 2025."

The SEC's unexpected approval of the Ethereum ETFs last week, coupled with the House's bipartisan support for the crypto market structure bill—endorsed by figures like former Speaker of the House Nancy Pelosi—indicates a favorable political climate for crypto legislation.

The stablecoin bill, although initially seen as an easily passable measure, faced delays due to debates over whether federal or state regulators should oversee stablecoin issuers. The House Financial Services Committee, led by Rep. Patrick McHenry (R-N.C.) and Rep. Maxine Waters (D-Calif.), has been actively working on resolving these issues since last year.

Public Citizen's report highlights that crypto industry super PACs have collectively raised substantial funds for the 2024 elections. More than half of these contributions come directly from corporate expenditures by companies like Coinbase and Ripple Labs, with the remainder from crypto executives and venture capitalists. Fairshake PAC, now the third-largest PAC in the U.S., notably spent $10 million opposing Rep. Katie Porter (D-Calif.) in her Senate primary race, an action Porter publicly criticized.

TD Cowen emphasizes the power of campaign contributions in shaping political outcomes. "Few things speak louder in politics than campaign contributions. Incumbents do not want to face challengers who receive cash from single-issue PACs," the note explained. "And they want to get that cash themselves to ensure their re-election."

As the political landscape continues to evolve with the influx of pro-crypto funding, TD Cowen suggests that the momentum could lead to the passage of the stablecoin bill this year and further advancements in market structure legislation by 2025.