Recently, U.S. senators engaged in negotiations regarding a bipartisan crypto market structure bill have shown an unprecedented eagerness to collaborate. Amid political distractions and disputes involving President Donald Trump, these lawmakers and their teams have been earnestly discussing the future regulation of the crypto industry in the United States.
Even with this rare display of bipartisanship, significant unresolved issues remain in the legislation, and external challenges could complicate progress.
After the House of Representatives passed the Digital Asset Market Clarity Act for the second time in recent years, the Senate took over to initiate a parallel effort. To the dismay of House lawmakers, they opted not to modify the Clarity Act but to develop their own distinct proposal.
Now, work on this initiative has extended into January, as Senate Banking Committee Chairman Tim Scott convened crypto stakeholders and fellow legislators for additional discussions about the upcoming steps. Despite the positive atmosphere, the uncertainty inherent in Congress lingers.
In January, the project may face Congress’ impending January 30 deadline for finalizing a federal budget. The last budget negotiation led to a government shutdown lasting weeks. If a similar situation arises before a resolution on the crypto bill, it could delay proceedings further and shift lawmakers’ focus.
The closer we get to the 2026 midterm elections, the greater the pressure will be on previously cooperating legislators to reconsider their positions. Lawmakers will have to evaluate the implications of collaborating with the crypto sector on their constituents, political relationships, and funding for their campaigns. Furthermore, if Democrats anticipate regaining control of the House or possibly the Senate, they may choose to delay negotiations to exert more influence over potential crypto policy.
Changes in Leadership?
The prospect of a Democratic shift in the House—currently predicted at 78% according to Polymarket betting—might return the leadership of the House Financial Services Committee to Representative Maxine Waters, a Democrat from California who previously held the position. Although she has engaged in productive negotiations with Republican counterparts, significant strides in advancing digital asset legislation only occurred after the Republicans assumed control, first under Patrick McHenry and now under French Hill. It’s uncertain how Waters, who has criticized recent legislative proposals and Trump’s personal ties to the crypto sector, would approach a fresh look at market structure.
However, a more concerning scenario for crypto insiders would involve a Democratic Senate, potentially placing industry critic Senator Elizabeth Warren in the role of chair for the Senate Banking Committee. For years, progressive Democrat Sherrod Brown’s leadership in that committee created obstacles for U.S. crypto policy. Although upcoming Senate races in 2026 generally favor Republicans retaining their slim majority, some electoral shifts may favor Democrats this November.
If Democrats gain chair positions in either the House or Senate, scrutiny and criticism of crypto legislation and federal regulatory oversight will increase significantly, giving them control over the agendas of pertinent committees.
However, the political environment around crypto strategies is evolving with the influx of substantial campaign contributions that began influencing congressional elections in 2022 and 2024. Fairshake, the industry’s largest political action committee, boasts a record warchest of over $100 million, according to federal disclosures. Congressional candidates will face pivotal decisions: Will their stance on crypto result in financial support for their opponents or provide them with the resources needed to win?
Even if Democrats prevail, many party members already support pro-crypto policies, with more possibly aligned following input from Fairshake and other PACs next year.
Seeking a Rare Achievement
Today, a political climate where standalone, bipartisan legislation feels like a relic contributes to the significant achievement of this year’s Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. The crypto industry aspires to replicate that success on a broader scale, which may necessitate painful compromises from Democrats in the coming months.
Among the most contentious issues is the ethical component championed by Democrats. They seek to prevent conflicts of interest stemming from Trump’s personal financial connections to the crypto industry, specifically his family’s investment in World Liberty Financial Inc. Democrats have called for a ban on such relationships involving government officials, but the White House has already dismissed early proposals.
Another area of contention is the bill’s approach to decentralized finance (DeFi), which could lead to major ramifications, possibly alienating either Democrats or the industry. Democrats advocate for some regulation of DeFi similar to traditional financial entities, while the industry worries that certain mandates could threaten its very existence. This issue has emerged as a potential dealbreaker for both parties.
Additionally, Democrats are insisting that their party members fill the vacant positions at the SEC and CFTC, which remains uncertain as Trump continues to reduce Democratic representation in regulatory roles across the government. The Democratic negotiators have also resisted allowing stablecoins to offer yields or rewards, defending the importance of traditional bank savings.
Insiders familiar with the Senate’s meeting with industry representatives this past Wednesday noted that Coinbase is advocating for reward programs to boost adoption. Moreover, the Blockchain Association and numerous other organizations sent a letter to Chairman Scott voicing that revisiting this topic, originally covered 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 before regulations have even been proposed.”
Urgency for Progress
A recent letter from three prominent crypto associations in Washington— the Digital Chamber, Blockchain Association, and Crypto Council for Innovation—urged Chairman Scott to release a draft of the current bill in early January and set a clear timeline for formally reviewing it, the stage where lawmakers suggest amendments and work to advance the bill for floor consideration.
The success of these efforts might depend on the willingness of several Democratic negotiators to accept a modified version of the ethical standards and a DeFi policy that leaves them feeling uncomfortable.
Dennis Porter, leader of the Satoshi Action Fund and participant in legislation discussions, mentioned that the pressure of upcoming midterms might be leveraged as a “boogeyman” to hasten negotiations.
“It’s important to remember that significant, comprehensive legislation often passes just before elections,” he noted. “The Dodd-Frank [Act of 2010] was enacted four months before the midterms. The Inflation Reduction Act [of 2022] was passed three months prior to the midterms.”
Nonetheless, political factors could intentionally sabotage the bill, with Republicans looking for crypto industry campaign support while Democrats remain optimistic about their prospects.
“Both sides might choose to defer this decision until voters have their say,” Porter pointed out. “It’s likely that Democrats will at least reclaim the House.”
There is still a possibility that the long-anticipated legislation may not materialize in 2026. In such a scenario, the outcome for crypto firms would be less favorable and less stable, resulting in policy changes directly enacted by regulators based on their current interpretations of existing laws. For example, while former SEC chief Gary Gensler viewed the law as backing the assertion that most crypto assets are securities, the current SEC head, Paul Atkins, holds a nearly opposing view.
Atkins and his counterpart at the Commodity Futures Trading Commission are moving forward with policies that clarify oversight and provide guidance. However, in the absence of explicit new legislation, existing policies could easily be overturned in the coming years.
Cody Carbone, CEO of the Digital Chamber, circulated a note following Wednesday’s meeting, where senators from both parties interacted with industry leaders, stating that discussions were “positive and collaborative,” but acknowledged that negotiators still face “significant policy issues to resolve.”
The new year is poised for a crucial return to negotiations.
