The US senators negotiating the crypto market structure bill have rarely been so openly eager to find a bipartisan solution to that legislation. Even as political noise and clashes with President Donald Trump rage around them, lawmakers and staff have gathered for a series of serious conversations seeking to debate the regulatory fate of the industry in the US.
Despite this increasingly rare bipartisan exercise and the confidence expressed by some of the key players, the unresolved details of the legislation are significant and some of the looming headwinds are beyond its control.
After the House of Representatives passed (for the second time in recent years) a bill to establish a regulatory regime for cryptocurrency markets, the Digital Asset Market Clarity Act, the Senate took over and got to work on a parallel effort. To the frustration of House lawmakers, they refused to simply adopt the Clarity Act and revise it, but instead worked on their own similar but different version.
Now, that work has been postponed until January, as decided by Senate Banking Committee Chairman Tim Scott, who brought crypto representatives and fellow lawmakers back together this week for another year-end chat about next steps. Even with all this cooperative energy, nothing is certain in Congress.
First, in January, the process could clash with Congress’ next deadline, Jan. 30, to craft a federal spending plan. The last time lawmakers were pressured to reach a budget deal, they ended up paralyzing the government for weeks. If that were to happen before the resolution of this cryptocurrency bill, it could again delay work for another uncertain period of time and force participating lawmakers to shift their focus elsewhere.
The later in 2026 this effort is diverted, the more the pressure of midterm elections will increase, which could leave previously cooperative lawmakers less willing to move forward. Lawmakers will have to weigh what open cooperation with the crypto industry means for their constituents, their political alliances, and for campaign fundraising. And more broadly, if Democrats believe they will regain control of the House, and potentially even the Senate, they will have to decide whether it is worth waiting for that change in order to have a stronger say in potential crypto policy language.
Do decks change hands?
The House’s move toward Democratic control (a chance now pegged at 78% in Polymarket betting) could return the House Financial Services Committee’s gavel to the hands of Rep. Maxine Waters, the California Democrat who had previously led the panel. While it has conducted serious negotiations with its Republican counterparts on cryptocurrency bills, the committee only began to move strongly on advancing digital asset legislation after Republicans took power: first Patrick McHenry and currently French Hill. It is unclear how Waters, who has been strongly critical of recent legislative efforts and Trump’s personal cryptocurrency ties, would proceed with a potential revamp of the market structure.
However, the deepest nightmare scenario for crypto experts would be that the long-term odds shift toward a Democratic Senate, which could leave industry critic Senator Elizabeth Warren as chair of the Senate Banking Committee. For years, the presence of progressive Democrat Sherrod Brown at the top of that committee represented an obstacle to US crypto policy. While Senate seats up for election in 2026 tend to favor Republicans maintaining their slim majority, the tide is on the Democratic side for some electoral upsets in November.
If Democrats win the House or Senate committee gavels, cryptocurrency legislation and oversight of the crypto approach by federal regulators will gain a new level of scrutiny and criticism. And they can control the legislative agendas of the panels the industry needs on its side.
But the political calculus for crypto decisions has changed markedly with the influx of immense amounts of campaign cash that really began to swing the congressional elections in 2022 and 2024. The largest of the industry’s political action committees, Fairshake, is already on standby with an unmatched war chest of more than $100 million, according to federal disclosures. Every congressional candidate will have to face the question: Will my crypto position result in millions potentially spent to bolster my opponents or millions spent to get me elected?
Even if Democrats win, many in their party already favor crypto-friendly policies, and more could come after Fairshake and other PACs weigh in next year.
Repeating the rarity
This is a political era in which independent bipartisan legislation seems like a relic of the distant past, which made the implementation of this year’s Guidance and Establishment of National Innovation for US Stablecoins (GENIUS) Act a very unusual moment. The crypto industry hopes to repeat that victory on a much larger scale, and if this were to be achieved in the coming months, Democrats may have to find ways to make painful concessions.
One of the most prominent points of friction is the ethical component promoted by the Democrats. They want to avoid the conflicts of interest threatened by Trump’s personal financial involvement with the cryptocurrency industry, such as the family’s stake in World Liberty Financial Inc. Democrats have called for a ban on such relationships involving government officials, but the White House has already rejected early efforts on that front.
Another tricky territory, the bill’s treatment of decentralized finance (DeFi), could blow up in either direction, sending Democrats or the industry itself packing their bags. Democrats want some form of DeFi regulation similar to that of other financial companies, while the industry worries that certain requirements could be existential threats that implode the space. Both sides have considered it as a possible decisive factor.
Additionally, Democrats have pushed to guarantee people in their party the vacant positions at the SEC and CFTC, an uncertainty as Trump continues to strip Democrats of regulatory roles across the government. And Democratic negotiators have resisted the idea of ​​stablecoins issuing returns or rewards, defending the role of traditional bank deposits.
People familiar with the Senate industry experts’ meeting on Wednesday said Coinbase is among those advocating for rewards programs to incentivize adoption, and the Blockchain Association (along with dozens of other organizations) sent a letter to Chairman Scott on Thursday saying that returning to this issue addressed in the GENIUS Act “would reopen a settled issue, undermine a carefully negotiated compromise, reduce consumer choice, suppress competition, and inject uncertainty into the implementation of a new law.” even before regulations have been proposed.”
faster please
This week, a separate letter from three of Washington’s most influential crypto associations (the Digital Chamber, the Blockchain Association, and the Crypto Council for Innovation) asked Chairman Scott to release a draft of the current bill in early January and set a solid date for a formal markup of that bill, that is, the process in which lawmakers offer amendments and work to advance a bill to the floor.
Ultimately, all of that may depend on the willingness of several of the Democratic negotiators to accept some lesser version of the ethical standard and some approach to DeFi that might leave them uncomfortable.
Dennis Porter, who heads the Satoshi Action Fund and has been inside discussions about the legislation, said it’s possible the threat of the looming midterm elections will be used as a “bogeyman” to urge faster negotiations.
“We must keep in mind that important and comprehensive legislation is regularly passed in the final months before elections,” he said. “Dodd-Frank [Act of 2010] Four months passed before the midterm elections. Inflation Reduction Law [of 2022] “It was three months before the midterm elections.”
Of course, political calculations may also deliberately undermine the bill, with Republicans eagerly awaiting campaign support from the crypto industry and Democrats brimming with confidence that their star is rising.
“Both sides could decide to resolve this at the ballot box,” Porter said. “More likely than not, Democrats will at least take the House.”
It remains possible that the long-awaited legislation may not find its way in 2026. So what will happen? The answer is, for cryptocurrency companies, a less satisfactory and less lasting system of policy changes instituted directly by regulators, using their current interpretations of the authorities that grant them their founding laws. For example, while former Securities and Exchange Commission chief Gary Gensler may have seen the law as supporting his view that most cryptoassets were securities, the agency’s current head, Paul Atkins, takes a nearly opposite view.
That’s why Atkins and his counterpart at the Commodity Futures Trading Commission are pushing for new policies that clarify the oversight of the space and try to provide clarity. But without an explicit new law behind them, specifically tailoring its authorities to digital assets, today’s new policies can more easily become rejected policies in a few years.
Cody Carbone, executive director of the Digital Chamber, circulated a memo after Wednesday’s meeting, in which senators from both parties heard from industry leaders, saying the conversation was “positive and collaborative,” although negotiators have “important policy issues to resolve.”
The new year will begin with a return to the negotiating table where the stakes are high.
