Investment bank TD Cowen has raised concerns about potential disruption within the cryptocurrency industry stemming from regulatory efforts.

The industry is expected to face stablecoin legislation this fall, followed by broader crypto market regulation over the next two years. However, TD Cowen's Jaret Seiberg, a financial services and housing policy analyst at the Washington Research Group, warns that legislation driven by specific company interests could "derail" progress within the industry, drawing parallels with past experiences in other sectors such as cannabis.

Seiberg's report highlights the typical pattern where industries initially unite to advance their legislative agendas through coordinated lobbying efforts. However, as legislative attention intensifies, individual companies within the industry begin advocating for measures that serve their own interests, leading to fragmentation and weakening of the industry's collective stance.

The cannabis industry serves as a case in point, where initial bipartisan efforts to allow states to decide on marijuana legalization eventually splintered due to the inclusion of niche interests in proposed bills.

Seiberg emphasized the challenge facing the crypto industry in navigating this evolution from unpassable to potentially passable legislation. He warns that company-specific interests may hinder the advancement of crucial bills, such as the stablecoin legislation expected this year and the broader market structure bill in 2025.

Potential disagreements within the industry over the specifics of regulatory measures could jeopardize legislative momentum. Seiberg cautions that divergent interests may lead lawmakers to perceive bills as premature or inadequately formulated for passage.

The passage of the Financial Innovation and Technology for the 21st Century Act (FIT21) by the House of Representatives on May 22 underscores the urgency for the crypto industry to address regulatory concerns. FIT21 includes provisions related to stablecoins and anti-money laundering measures, highlighting the ongoing regulatory scrutiny facing the crypto sector.