Countdown to the midterm elections: Can the US crypto bill pass successfully?

Title: Midterms, shutdown risks and negotiations: Can Congress pass a sweeping crypto bill in 2026?

Author: Sarah Wynn

Source:

Repost: Mars Financial

The next year will be crucial for cryptocurrency legislation, with the key question being whether lawmakers can pass comprehensive digital asset regulation before the midterm elections.

Crypto advocates speaking with The Block estimate that the likelihood of such legislation becoming law in 2026 is between 50% and 60%. Optimism stems from ongoing discussions between Democrats and Republicans, but several thorny issues remain to be resolved.

Kevin Wysocki, Policy Lead at Anchorage Digital, believes there is a 50% chance the bill will pass into law in 2026.

“I think what’s really encouraging is that members of Congress—both Republicans and Democrats—are engaging in frequent communication, which is a very positive sign,” he told The Block. “Some of the issues still being debated are difficult, and the legislation itself covers banking law, securities law, commodities law—so it’s quite complex.”

Legislative Process and Current Status

Senators are working on drafting a comprehensive bill aimed at regulating the cryptocurrency industry thoroughly. The Senate Banking Committee has a draft that seeks to delineate jurisdiction between two primary federal agencies—the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC)—and create a new category for “auxiliary assets” to clarify which cryptocurrencies are not securities. Meanwhile, the Senate Agriculture Committee, which oversees the CFTC, also published a draft legislation last month that would grant the agency new powers. The versions from both committees need to be merged into a unified bill.

There had been optimistic expectations that the Senate Banking Committee would hold hearings, amend, and vote on the bill by the end of the year, but that hope has been dashed. However, a spokesperson for the Senate Banking Committee said they are now seeking to “review” the bill early in 2026 and noted progress has been made with Democrats.

The spokesperson stated: “Chairman Scott and the Senate Banking Committee have made significant progress with Democratic colleagues in advancing bipartisan legislation on digital asset market structure. The committee continues negotiations and looks forward to reviewing the bill in early 2026.”

Points of Contention

Sources indicate that there are several pain points that need resolution within the Crypto Market Structure Bill.

Regulation of Interest-Bearing Stablecoins

A flashpoint is the tense relationship between banks and crypto companies regarding how to regulate interest-bearing stablecoins.

· Banking Industry Stance: Banking trade groups have said that the GENUIS Stablecoin Act, which became law this summer, failed to address key loopholes. They argue that the legislation does not sufficiently prohibit issuers from offering interest on stablecoins. They warn that this omission could turn stablecoins into savings and credit tools rather than simple payment instruments, introducing what they call “distorted market incentives” for traditional banks.

· Crypto Industry Perspective: In contrast, crypto advocates believe that the ability to earn interest on stablecoins simply represents fair and healthy competition.

DeFi Regulation and Jurisdiction

Cody Kabo, CEO of Digital Chamber, pointed out that another issue is how to regulate decentralized finance, especially regarding anti-money laundering measures and which tokens should fall under SEC or CFTC jurisdiction. He added that considering the SEC’s more critical stance on cryptocurrencies under former Chair Gary Gensler, industry players worry the SEC might become the sole decision-maker.

“I want to say that from what I’ve heard in the industry, if legislation states that the SEC will be the primary decision-maker on whether a token is a security or a commodity, that’s very concerning because it looks like going down Gary Gensler’s old path—where the SEC is the only police on the street deciding everything,” Kabo said.

Trump’s Conflict of Interest

Another issue in the Crypto Market Structure Bill involves President Donald Trump’s conflicts of interest in the crypto space. Bloomberg estimated in July that the current president has profited approximately $620 million from his family’s crypto ventures, including World Liberty Financial DeFi and stablecoin projects that list Trump and his three sons as co-founders. The family also owns a 20% stake in Bitcoin mining company American Bitcoin. Lawmakers have also expressed concern over Trump’s launch of freely circulating meme coins TRUMP and MELANIA in the weekend before his inauguration.

Cynthia Lummis, Republican senator who has been involved in negotiations on the Senate bill, said at the Blockchain Association Policy Summit in Washington, D.C., in December that the White House had been involved in discussions about ethical clauses. Lummis said she and Democratic senator Ruben Gallego had submitted draft clauses to the White House, but they were returned.

CFTC Vacancies

Kabo stated that vacancies in the CFTC’s commissioner positions are also under review and have become a bargaining chip for Democrats.

Over the past year, four CFTC commissioners—Democrats Christine Johnson and Christy Goldsmith Romero, and Republicans Caroline Pham and Summer Mersinger—have left or announced plans to leave the agency. Acting Chair Pham said she plans to step down once new Chairman Mike Selig is confirmed, leaving the agency with only one Republican commissioner.

“I don’t think any senator would want to give such power to this small agency, which currently only has one chair (when it should be a five-person commission),” Kabo said.

Approaching Elections and Time Pressure

Sources say that the next steps in the Senate will be critical. Kabo noted that once the Senate Banking Committee’s bill is ready, passes committee votes, and moves forward, it will need to be merged with the Senate Agriculture Committee’s version and then voted on by the full Senate.

Additionally, the Senate’s Crypto Market Structure Bill will need to be coordinated with the version passed by the House earlier this summer, known as the “Clear Bill.”

“There are too many steps remaining,” Kabo said.

He expressed concern if the Senate’s bill review does not happen in January.

“They need to show progress right out of the gate,” he said. “So, if I see both committees conducting reviews, a compromise bill emerging from the Senate, and the possibility of a Senate floor vote within the next six weeks, I’ll feel very good. If none of that happens in January, I’ll be very pessimistic.”

Then comes the midterm elections, which will divert some legislators’ focus toward their campaigns.

Kevin Wysocki from Anchorage said lawmakers have about until the first half of next year to pass a crypto market structure bill, after which election season will dominate.

“From a timeline perspective, I believe our focus will be on the first half of next year,” he said. “Then, perhaps around late 2026, after the elections, there will be a small window of opportunity to push this legislation.”

Rebecca Liao, CEO of Saga (a former member of President Joe Biden’s 2020 presidential campaign team), said some Senate Democrats are indeed enthusiastic about passing the Crypto Market Structure Bill. However, with upcoming midterms and another budget debate, time is a challenge. After a 43-day government shutdown ended in November, the government has been temporarily funded through January 30, 2026. If no further funding agreement is reached, the government will shut down again, delaying work on the Crypto Market Structure Bill.

Liao noted that as midterms approach, Trump’s crypto conflicts of interest may garner more attention.

“We see Democrats forming a narrative around ‘affordability,’ so anything with privileges or illicit gains by the president or his administration will be repeatedly attacked in Democratic messaging,” she said.

Regarding what might happen if lawmakers fail to pass the Crypto Market Structure Bill into law by 2026, Liao said that action must be taken, especially considering that financial institutions have already entered the digital asset space.

“To truly achieve mass adoption and use of cryptocurrencies, clear regulation is essential, so I believe there will be renewed efforts,” she said.