Tillis Blocks Crypto Bill Without Ethics Provisions, TD Cowen Says

Republican Senator Thom Tillis has become the “latest roadblock” to the Clarity Act crypto bill by demanding ethics provisions be included, according to investment bank TD Cowen. On Monday, Tillis told Politico he would oppose the bill if it does not include ethics language, stating: “There has to be ethics language in the bill before it leaves the Senate, or I’ll go from one of the people working on negotiating it to voting against it.”

Tillis’s Recent Political Leverage

Tillis, a member of the Senate Banking Committee, recently demonstrated his willingness to challenge the administration on separate matters. On Sunday, he announced support for Kevin Warsh as the next Federal Reserve chairman, after previously blocking a vote on Warsh’s nomination due to concerns about a Justice Department probe into current Fed Chairman Jerome Powell. The DOJ probe was dropped on Friday, clearing the way for Warsh’s confirmation.

Jaret Seiberg, managing director at TD Cowen’s Washington Research Group, noted in a Monday analysis that the ethics issue is problematic because “it likely would apply to the Trump family.” Seiberg stated: “We do not see Tillis backing down as he just won a standoff with the President over the Federal Reserve.”

Tillis’s Influence Over Bill Outcome

Tillis has been a key negotiator for the crypto bill on the stablecoin yield issue and last week requested that the Banking Committee leadership delay a markup on the bill until May. TD Cowen emphasized his outsized influence, with Seiberg stating: “Tillis has outsized influence over the future of the Clarity Act. And these comments tell us he is willing to use that power.”

Seiberg noted that Tillis is not seeking re-election, which may reduce political pressure on him to align with Trump. “This appears to be a legacy issue for Tillis. He wants to ensure government officials, including the President, cannot profit from the crypto sector the legislation would advance,” Seiberg said.

Broader Hurdles to Bill Passage

While many market participants expect the bill to pass this year, TD Cowen continues to question this conventional wisdom. Seiberg reiterated that major hurdles remain without easy solutions. Arguments in favor of the bill include the growing political influence of the crypto industry, Republican plans to make the U.S. a global crypto capital, and possible benefits to business interests linked to Trump’s family.

Crafting ethics or conflict-of-interest provisions presents a specific challenge. Applying the rules only after the next presidential inauguration could avoid impacting Trump’s family, but Seiberg said it is unlikely that Democrats or Tillis would accept that approach. Imposing restrictions that affect current business interests could be difficult for Trump to accept.

Seiberg previously flagged five additional hurdles for the bill beyond the stablecoin yield issue, including a lack of CFTC commissioners, conflicts tied to the Trump-linked crypto project World Liberty Financial, and concerns around Iran’s use of crypto payments.

Regarding overall passage prospects, Seiberg stated: “As with anything political, there can be a deal if there is a desire to find a solution. Our point, however, continues to be that this is not as simple as it may appear. There is still real work on the bill that must get done.”

Seiberg has previously said that passing the bill will likely require personal involvement from Trump, along with compromises that can receive bipartisan support and clear the 60-vote threshold in the Senate. Last month, he stated he is “increasingly pessimistic” and sees only a one-in-three chance of the crypto bill passing this year. Earlier analysis suggested the bill could be delayed to 2027, with final rules potentially taking effect in 2029 if hurdles are not resolved this year.