Tillis Blocks Crypto Bill Over Ethics Provisions, TD Cowen Says

Republican Senator Thom Tillis has emerged as an obstacle to the crypto Clarity Act, stating Monday that he will oppose the bill unless it includes ethics language, according to investment bank TD Cowen and reporting from Politico. “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 told Politico.

Legislative Context and Tillis’s Influence

Tillis, a member of the Senate Banking Committee, has been a key negotiator on the stablecoin yield issue and recently asked Banking Committee leadership to delay a markup on the bill until May. Jaret Seiberg, managing director at TD Cowen’s Washington Research Group, said in a Monday note that Tillis has “outsized influence over the future of the Clarity Act” and that his comments indicate he is “willing to use that power.”

Ethics Provisions and Trump Family Implications

The ethics language Tillis is demanding represents a new hurdle for the crypto bill. According to Seiberg, “This is a problem as it likely would apply to the Trump family.” Seiberg noted that crafting ethics or conflict-of-interest provisions presents a challenge: applying rules only after the next presidential inauguration could avoid impacting Trump’s family, but “it is unlikely that Democrats or Tillis would accept that approach.” At the same time, “imposing restrictions that affect current business interests could be difficult for Trump to accept.”

Tillis’s Recent Federal Reserve Standoff

Seiberg stated that he does not see Tillis backing down, citing the senator’s recent success in a standoff with the President over the Federal Reserve. Tillis had blocked a vote on Kevin Warsh’s nomination as Fed chairman due to a Justice Department probe into current Fed chairman Jerome Powell. The probe was dropped on Friday, and Tillis said Sunday he will support Warsh’s nomination.

Seiberg indicated that Tillis’s position may be driven by principle rather than political calculation: “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.” Tillis is not seeking re-election, which may reduce political pressure on him to align with Trump.

Broader Obstacles to Bill Passage

While many in the market expect the Clarity Act to pass this year, Seiberg reiterated that significant hurdles remain without easy solutions. He previously flagged five other obstacles 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.

Seiberg has estimated only a one-in-three chance of the crypto bill passing this year. He has said that passage will likely require personal involvement from Trump, along with compromises that can receive bipartisan support and clear the 60-vote threshold in the Senate. If hurdles are not resolved this year, Seiberg said the bill could be delayed to 2027, with final rules potentially taking effect in 2029.

“As with anything political, there can be a deal if there is a desire to find a solution,” Seiberg said. “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.”