Republican Senator Thom Tillis is threatening to pull his support from a key crypto regulation bill unless it includes strict ethics and conflict-of-interest provisions, creating a fresh hurdle for the legislation in the Senate.
Tillis conditions support on ethics clauses
Tillis, a member of the Senate Banking Committee, has told colleagues and reporters that he will oppose the “Clarity Act” if negotiators fail to add language addressing conflicts of interest for senior government officials.
According to a note from TD Cowen’s Washington Research Group, Tillis has made his backing contingent on robust ethics clauses, warning that he will vote against the measure without them. His demands line up with calls from Senate Democrats who want stronger limits on how executive branch officials can hold or profit from digital assets.
Cowen’s analysts said the ethics debate is partly driven by concerns over business interests linked to former President Donald Trump and his family, including ventures connected to digital financial projects.
Ethics fight stalls Senate timetable
Tillis’ new stance has already slowed the bill’s progress. At his urging, the Senate Banking Committee pushed formal consideration of the measure from April into May, compressing the review schedule and narrowing the legislative window.
The delay has dimmed expectations that the bill will be enacted in 2026, with forecasters trimming their probability estimates as deadlines slip.
TD Cowen still puts the odds of passage this year at about one in three. Galaxy Digital’s research team is somewhat more upbeat, citing roughly 50-50 chances. Prediction market platform Polymarket shows sentiment weakening, with the implied probability of passage dropping to 38% after the latest postponements.
Central dispute: conflict-of-interest rules
Formulating conflict-of-interest provisions has become a central sticking point. Analysts say lawmakers are wrestling with how far to go in restricting financial activities of top officials, including the presidency, without overreaching.
One option under discussion would delay the effective date of the ethics rules until after the next presidential inauguration. TD Cowen reports that lawmakers in both parties are resisting that approach, arguing it would postpone accountability and raise new political risks. Existing business ties of high-profile political figures further complicate consensus.
Cowen notes that Tillis, who is not seeking reelection, appears focused on long-term governance rather than short-term political pressure. The bank’s research says he wants to ensure that presidents and other senior officials cannot profit directly from digital asset policies shaped under the new framework.
Tillis’ leverage on stablecoin provisions
Tillis holds significant sway over the bill’s path, particularly on sections governing stablecoin yields and related banking rules. Cowen’s team said his role on the Banking Committee gives him an effective veto over key provisions and the timing of markups.
He recently signaled his influence by supporting economist Kevin Warsh for the Federal Reserve chairmanship, after previously blocking a vote tied to an earlier Justice Department probe that was dropped last week. Cowen suggests this track record underscores his willingness to use procedural leverage to advance governance priorities.
Broader legislative obstacles
Even if negotiators bridge the divide on ethics and stablecoin yields, several other obstacles could slow or derail the Clarity Act.
TD Cowen and other research groups highlight:
- Regulator staffing gaps: A severe shortage of personnel at the Commodity Futures Trading Commission is raising questions about the agency’s capacity to oversee new digital asset responsibilities.
- Prediction market disputes: Lawmakers remain divided over how to regulate on-chain prediction markets and event contracts, an issue intertwined with market integrity and gambling rules.
- Geopolitical and AML pressures: Emerging concerns about cross-border crypto payments, sanctions enforcement, and anti-money laundering provisions are adding layers of complexity to the bill’s drafting.
- Regulatory vacancies and leadership battles: Open seats and looming appointments at key financial agencies are feeding political disputes over who would implement and enforce the new rules.
Cowen previously flagged five major hurdles to passage, including Trump-related commercial ties to digital financial projects and unresolved questions around cross-border crypto flows.
The firm cautions that, even if the bill clears Congress this year, the final implementation timeline could stretch out to 2029, as agencies work through rulemaking, staffing, and enforcement frameworks.
Growing market waits for clarity
The mounting legislative delays come as the stablecoin sector grows in size and systemic importance.
By early April 2026, the total market capitalization of stablecoins exceeded $315 billion, highlighting the scale of assets awaiting a clear regulatory regime. In the first quarter of 2026, stablecoins accounted for roughly 75% of all crypto trading volume, a record share that underscores their central role in market liquidity.
Total transaction volume on stablecoin networks surpassed $28 trillion during the quarter, signaling deep integration into digital finance and rising relevance for payments, settlements, and trading infrastructure.
Heightened sensitivity to Washington signals
With the banking panel now aiming for a compressed May schedule, market participants face a short window in which the bill can realistically advance. Galaxy’s research arm has warned that if the committee fails to move the Clarity Act by mid-May, the probability of passage this year could fall sharply.
Analysts expect elevated sensitivity to legislative headlines in the coming weeks. Any signal that Tillis is softening or hardening his stance on ethics language, or that party leaders have reached a compromise, is likely to influence expectations around the regulatory outlook for stablecoins and the broader digital asset market.
Want to understand how regulation shapes crypto’s future? Read this deep dive on US crypto regulation next.
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