US senators negotiating the crypto market structure bill have rarely been so openly eager to find a bipartisan solution to this legislation. Even as political noise and clashes with President Donald Trump rage around them, lawmakers and staffers have gathered for a series of serious discussions aimed at determining the regulatory fate of the industry in the United States.
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 headwinds ahead are beyond their control.
After the House of Representatives approved – for the second time in recent years – a bill to establish a regulatory regime for crypto markets, the Digital Asset Market Clarity Act, the Senate took over and got to work on a parallel effort. Much to the frustration of House lawmakers, they refused to simply take the Clarity Act and revise it, but instead worked on their own, similar but distinct approach.
Now, that work has been postponed until January, as decided by Senate Banking Committee Chairman Tim Scott, who this week reconvened crypto representatives and fellow lawmakers to have another year-end discussion about next steps. Even with all this cooperative energy, nothing is ever sure in Congress.
First, in January, the process could run up against the next congressional deadline, January 30, to finalize a federal spending plan. The last time lawmakers were pressed for a budget compromise, they ended up shutting down the government for weeks. If this were to happen before this crypto bill is resolved, it could again delay the work for another uncertain period and force participating lawmakers to focus elsewhere.
The further that effort moves toward 2026, the more pressure from midterm elections increases, which could make previously cooperative lawmakers less willing to follow suit. Lawmakers will need to weigh what open cooperation with the crypto industry means for their constituents, their political alliances and for campaign fundraising. And more generally, if Democrats think they will regain control of the House, and potentially even the Senate, they will have to decide whether it is worth waiting for this change so that they can have a stronger voice in the potential language of crypto policy.
Are the hammers changing hands?
The House’s shift to Democratic control — a possibility now pegged at 78% in Polymarket betting — could put the gavel of the House Financial Services Committee back in the hands of Rep. Maxine Waters, the California Democrat who previously led the panel. Although she led serious negotiations with her Republican counterparts on crypto bills, the committee only began advancing digital asset legislation after Republicans took power – first Patrick McHenry, and currently French Hill. It’s unclear how Waters, who has sharply criticized recent legislative efforts and Trump’s personal crypto ties, would proceed with a possible overhaul of the market structure.
However, the deeper nightmare scenario for crypto insiders would be that the odds are longer moving to 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 this committee posed an obstacle to US crypto policy. While the Senate seats open for election in 2026 tend to favor Republicans retaining their slim majority, the trend is favoring Democrats for some electoral upsets in November.
If Democrats win the committees in the House or Senate, crypto legislation and oversight of the crypto approach by federal regulators will face a new level of scrutiny and criticism. And they can control the legislative agendas of the panels that the industry needs on their side.
But the political calculus for crypto decisions has changed significantly with the influx of immense sums of campaign cash that has truly begun to alter congressional elections in 2022 and 2024. The largest of the industry’s political action committees, Fairshake, already stands tall with an unmatched war chest of well over $100 million, according to federal disclosures. Every candidate for Congress will have to face the question: Will my position on crypto potentially result in millions spent to support my opponents or millions spent to get me elected?
Even if Democrats win, many in their party already favor friendly crypto policies, and more could come after Fairshake and other PACs have their say next year.
Repeat rarity
This is a political era in which standalone, bipartisan legislation seems to be a relic of the distant past, which has made this year’s Guiding and Implementing National Innovation for US Stablecoins (GENIUS) Act a very unusual moment. The crypto industry is hoping to repeat this victory on a much larger scale, and if that happens in the coming months, Democrats may have to find ways to make painful compromises.
One of the most publicized sticking points is the ethics component carried by the Democrats. They want to avoid 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 efforts to do so.
Another tricky territory, the bill’s treatment of decentralized finance (DeFi), could blow up either way, dispatching either Democrats or the industry itself. Democrats want some sort of regulation of DeFi similar to that of other financial companies, while the industry fears that some requirements pose existential threats that implode the space. This has been presented as a potential obstacle to a deal by both sides.
Additionally, Democrats have pushed for members of their party to be guaranteed vacant positions at the SEC and CFTC — an uncertainty as Trump continues to strip Democrats of their regulatory roles across government. And Democratic negotiators resisted the idea of stablecoins issuing yields or rewards, defending the role of traditional bank deposits.
People familiar with the Senate gathering of industry insiders on Wednesday said Coinbase was among those advocating for reward 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 topic addressed in the GENIUS Act “would reopen a settled issue, undermine a carefully negotiated compromise, reduce consumer choice, suppress competition, and inject uncertainty into implementation.” implementation of a new law before regulations have even been proposed.
Faster, please
A separate letter this week 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 current bill in the first days of January and set a specific date for a formal markup of that bill, that is, the process in which lawmakers propose amendments and work to advance a bill.
All of this could ultimately depend on the willingness of several Democratic negotiators to accept a lesser version of the ethical standard and an approach to DeFi that might make them uncomfortable.
Dennis Porter, who heads the Satoshi Action Fund and participated in discussions on the legislation, said it was possible that the threat of looming midterms could be used as a “boogie man” to push for faster negotiations.
“We must keep in mind that important and comprehensive laws are regularly passed in the final months before elections,” he said. “Dodd-Frank [Act of 2010] passed four months before midterms. Inflation Reduction Act [of 2022] passed three months before midterms.
Of course, political calculations may also deliberately undermine the bill, with Republicans eagerly awaiting campaign support from the crypto industry and Democrats confident in the rise of their star.
“Both sides could decide to resolve this issue at the ballot box,” Porter said. “It’s more than likely that Democrats will at least hold the House.”
It remains possible that the long-awaited legislation will fail to find its way into 2026. So what will happen then? The answer is – for crypto companies – a less satisfactory and less sustainable system of policy changes directly instituted by regulators, using their current interpretations of the authorities granted to them by their basic laws. For example, while former Securities and Exchange Commission head Gary Gensler may have viewed the law as supporting his view that most crypto assets were securities, the agency’s current head, Paul Atkins, has a nearly opposite view.
So, Atkins and his counterpart at the Commodity Futures Trading Commission are moving forward with new policies that clarify the oversight of the space and attempt to bring clarity. But without an explicit new law, specifically tailoring authorities to digital assets, new policies today can more easily become rejected policies a few years from now.
Cody Carbone, CEO of the Digital Chamber, circulated a memo after Wednesday’s meeting, in which senators from both parties heard from industry leaders, saying the discussion was “positive and collaborative” even though negotiators have “important policy issues to resolve.”
The new year will begin with a return to the high-stakes negotiating table.
