TD Cowen warns crypto companies themselves may push laws that 'derail' crypto industry as a whole

The investment bank TD Cowen sees potential disruption in the cryptocurrency industry based on regulatory efforts. 

The crypto industry is on track to see stablecoin legislation this fall and broader crypto market regulation within the next two years. However, legislation that moves from the bigger picture to specific company interests can "derail" the industry, as seen previously with the cannabis industry, writes Jaret Seiberg, financial services and housing policy analyst TD Cowen Washington Research Group

Seiberg noted that such splintering occurred with the cannabis industry. Once unified in its bipartisan push to let states decide whether to legalize marijuana, the industry lobbying efforts broke off to include niche interests in proposed cannabis bills. 

"Navigating this evolution from legislation that can't pass to legislation that looks like it will pass, in our view, is now the crypto industry's biggest Washington challenge. Companies may decide the stablecoin bill is not needed or would benefit rivals too much," Seiberg wrote. "That could derail the stablecoin bill this year, which would then rob the market structure bill of momentum going into 2025."

"We also believe there is a risk that industry demands for the market structure bill will splinter as entities could use it to undo SEC enforcement actions or to dictate how specific tokens could be regulated. Disagreements in this space make it much easier for lawmakers to conclude the bill is not yet ready to pass," he added. 

On May 22, the House of Representatives passed the Financial Innovation and Technology for the 21st Century Act, or FIT21, a crypto legislation bill that included rule-making for stablecoins and anti-money laundering.