The US senators negotiating the crypto market structure bill have rarely been so openly eager to find a bipartisan solution for that legislation. Even as political noise and clashes with President Donald Trump rage around them, lawmakers and staff have met for a series of serious talks to try to carve out the industry’s regulatory fate in the US
Despite this increasingly rare bipartisan exercise and the confidence expressed by some of the leading players, the details of the legislation to be worked out are significant and some of the coming headwinds are out of their hands.
After the House of Representatives approved – for the second time in recent years – a bill creating a regulatory regime for the crypto markets, the Digital Asset Market Clarity Act, the Senate seized that baton and launched a parallel effort. To the frustration of House lawmakers, they declined to simply take up the Clarity Act and revise it, instead working on their own similar-but-distinct position.
Now that work has slipped into January, as decided by the chairman of the Senate Banking Committee, Tim Scott, who gathered crypto representatives and other lawmakers again this week for another end-of-year talk about next steps. Even with all this collaborative power, nothing is ever certain in Congress.
First, in January, the process could run up to Congress’ next deadline, Jan. 30, to figure out a federal spending plan. The last time lawmakers were pressed to craft a budget compromise, they ended up shutting down the government for weeks. If it were to happen before the decision on this crypto bill, it could again delay the work for another uncertain period and force the participating legislators to shift their focus elsewhere.
The later into 2026 this effort goes, the more the midterm election pressure mounts, which could leave previously cooperative lawmakers less willing to go along. 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’ll take back control of the House, and potentially even the Senate, they’ll have to decide whether it’s worth waiting until that switch so they can have a stronger voice in potentially crypto-political language.
Gavel changing hands?
The House’s shift toward Democratic control — a possibility now pegged at 78% in Polymarket betting — could put the gavel on the House Financial Services Committee back in the hands of Rep. Maxine Waters, the California Democrat who previously chaired the panel. While she has engaged in serious negotiations with her Republican colleagues on crypto bills, the committee only began strong progress in advancing digital asset legislation after Republicans took over — first Patrick McHenry and now French Hill. It is uncertain how Waters, who has been highly critical of recent legislative efforts and Trump’s personal crypto ties, would proceed with a potential do-over on market structure.
However, the deeper nightmare scenario for crypto insiders would be the longer odds switch to a Democratic Senate, which could leave industry critic Senator Elizabeth Warren as the chair of the Senate Banking Committee. For years, the presence of progressive Democrat Sherrod Brown at the top of this committee meant a roadblock for US crypto policy. While the Senate seats up for election in 2026 tend to favor Republicans maintaining their narrow majorities, the tide is on the Democratic side for some November caucuses.
If Democrats win committee caucuses in either the House or Senate, crypto legislation and the oversight of the crypto approach by federal regulators will face a new level of scrutiny and criticism. And they can control the regulatory agendas of panels that the industry needs on their side.
But the political calculus for crypto decisions has changed significantly with the influx of massive amounts of campaign cash that began to seriously shift congressional elections in 2022 and 2024. The industry’s largest political action committee, Fairshake, is already poised with an unprecedented amount well over $100 million, according to federal filings. Every congressional candidate will have to face the question: Will my crypto position result in potentially millions spent on empowering my opponents or millions spent on getting me elected?
Even if Democrats win, many in their party already favor friendly crypto policies, and more may arrive after Fairshake and other PACs have their say next year.
Repeats the rarity
This is a political era where stand-alone, bipartisan legislation seems a relic of the distant past, which made the passage of this year’s Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act a very unusual moment. The crypto industry hopes to repeat this victory on a much larger scale, and if it were to happen over the next few months, Democrats may have to find ways to make painful compromises.
One of the most high-profile points of friction is the ethics component driven by Democrats. They want to avert the conflicts of interest threatened by Trump’s personal financial involvement in the crypto 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 action on that front.
Another of the difficult areas, the bill’s treatment of decentralized finance (DeFi), could blow in either direction, sending either the Democrats or the industry itself packing. Democrats want some form of regulation of DeFi on a par with other financial businesses, while the industry worries that certain requirements could be existential threats that implode the space. It has been held up as a potential deal breaker by both sides.
Plus, Democrats have been pushing for people from their party to secure the vacant seats on the SEC and CFTC — an uncertainty as Trump continues to strip Democrats of regulatory roles across government. And the Democratic negotiators have opposed the idea of stablecoins issuing returns or rewards that defend the role of traditional bank deposits.
People familiar with the Senate’s gathering of industry insiders on Wednesday said Coinbase is among those arguing for rewards programs to encourage 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 diminish a carefully compromised issue and reopen a compromise for the consumer. election, stifle competition, and inject uncertainty into the implementation of a new law before regulations have even been proposed.”
Faster, please
A separate letter this week from three of the most influential crypto associations in Washington — the Digital Chamber, the Blockchain Association and the Crypto Council for Innovation — requested that Speaker Scott release a draft of the current bill in the opening days of January and set a firm date for a formal markup of that bill, meaning the process in which lawmakers offer amendments and work to advance a bill.
All of this may ultimately depend on the willingness of more of the democratic traders to agree to a lesser version of the ethical standard and an approach to DeFi that may make them uneasy.
Dennis Porter, who runs the Satoshi Action Fund and has been involved in discussions about the legislation, said it is possible that the threat of looming midterms is being used as a “boogie man” to encourage faster negotiations.
“We should keep in mind that big, sweeping legislation is regularly passed in the final months before elections,” he said. “Dodd-Frank [Act of 2010] passed four months before the midterm. The Inflation Reduction Act [of 2022] passed three months before the midterm.”
Of course, political calculations could also deliberately undermine the bill, with Republicans looking forward to the crypto industry’s campaign support and Democrats brimming with confidence that their star is rising.
“Both sides can decide to settle this at the ballot box,” Porter said. “It’s more than likely that the Democrats will at least take the House.”
It is still possible that the long-awaited legislation will not find its way in 2026. What happens then? The answer is – for crypto firms – a less satisfactory and less sustainable system of policy changes directly imposed by regulators, using their current interpretations of the authorities their founding laws grant them. For example, while former head of the Securities and Exchange Commission, Gary Gensler, may have seen the law as supporting his view that most crypto assets were securities, the agency’s current head, Paul Atkins, has an almost opposite opinion.
So Atkins and his counterpart at the Commodity Futures Trading Commission are pushing new policies that clarify oversight of the space and try to bring clarity. But without explicit new law behind them specifically tailoring their authorities with digital assets, new policies today 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, where senators from both parties heard from industry leaders, saying the talk was “positive and collaborative” even though the negotiators have “significant policy issues to address.”
The new year will begin with a major effort back to the negotiating table.
