Will the US crypto bill pass before the midterm elections?

Source: The Block

Compiled and edited by: BitpushNews

The coming year is crucial for cryptocurrency legislation, with the key question being whether lawmakers can pass a comprehensive digital asset regulatory bill before the midterm elections.

Cryptocurrency advocates who spoke with The Block estimated the chances of such a bill becoming law in 2026 to be between 50% and 60%. This optimism stems from ongoing discussions between Democrats and Republicans, but several thorny issues remain to be resolved.

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

“I think what’s really positive is that there’s a lot of communication between members of Congress—Republicans and Democrats—which is a very positive sign,” he told The Block. “Some of the issues that are still [debated] are difficult, and the legislation itself covers banking, securities, commodities—so it’s complex.”

Legislative Process and Current Status

Senate lawmakers are working on a comprehensive bill aimed at regulating the cryptocurrency industry across the board. The Senate Banking Committee already has a draft bill that seeks to delineate jurisdiction between the two main 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 released its own draft bill last month, which would grant the agency new powers. The versions from both committees need to be integrated and unified.

There had been optimistic expectations that the Senate Banking Committee would hold hearings before the end of the year to amend and vote on the bill, but those hopes have been dashed. However, a spokesperson for the Senate Banking Committee stated that they are now seeking to "approve" the bill in early 2026, noting that progress has been made with Democrats.

The spokesperson stated, "Chairman Scott and the Senate Banking Committee have made significant progress with their Democratic counterparts in advancing bipartisan legislation on the structure of digital asset markets. The committee continues negotiations and looks forward to approval in early 2026."

Controversy Focus

Sources say there are several pain points in the cryptocurrency market structure bill that need to be addressed.

Regulation of interest-bearing stablecoins

One flashpoint was the tension between banks and cryptocurrency companies over how to regulate interest-bearing stablecoins.

• Banking Sector Stance: Banking trade groups say the GENIUS Stablecoin Act, which became law this summer, fails to address key loopholes. They argue that the regulation fails to adequately prohibit issuers from offering interest on stablecoins. They warn that this oversight could turn stablecoins into savings and credit instruments rather than simple payment tools, thus introducing so-called "distorted market incentives" for traditional banks.
• Crypto industry perspective: In contrast, cryptocurrency advocates argue that the ability to offer stablecoin yields simply represents fair and healthy competition.

DeFi Regulation and Jurisdiction Division

Cody Kabun, CEO of the Chamber of Digital Commerce, pointed out that another issue is how to regulate decentralized finance, particularly how to regulate DeFi protocols in terms of anti-money laundering, and whether certain tokens should fall under the jurisdiction of the SEC or the CFTC. He added that given the SEC's more critical stance on cryptocurrencies under former Chairman Gary Gensler, the industry is concerned that the SEC may become the decision-maker.

"What I'm saying is that I've learned from the industry that it's very worrying if legislation stipulates that the SEC will be the primary decision-maker in determining whether a token is a security or a commodity, because it looks a lot like the old Gary Gensler path, where the SEC is the only policeman on the street and decides everything," Capon said.

Trump's Conflict of Interest

Another issue in the cryptocurrency market structure bill concerns President Donald Trump's conflict of interest in the cryptocurrency space. Bloomberg estimated in July that the current president has profited approximately $620 million from his family's crypto businesses, including World Liberty Financial's DeFi and stablecoin projects, for which Trump and his three sons are listed as co-founders. The family also owns a 20% stake in the Bitcoin mining company American Bitcoin. Lawmakers have also repeatedly expressed concerns about the freely circulating Trump and MELANIA meme coins launched by Trump the weekend before his inauguration.

Republican Senator Cynthia Loomis, who has been involved in Senate bill negotiations, said at the Blockchain Association policy summit in Washington, D.C., in December that the White House had been involved in discussions regarding the ethics clause. Loomis said she and Democratic Senator Ruben Gallego submitted the text of the clause to the White House, but it was returned.

CFTC personnel vacancies

Kabang stated that vacant CFTC commissioner positions are also under scrutiny and have become a powerful negotiating tool for the Democrats.

Over the past year, four CFTC commissioners—Democrats Christine Johnson and Kristi Goldsmith Romero, and Republicans Carolyn Van and Summer Mersinger—have left the agency or announced plans to step down. Van, currently acting chair, has stated she plans to leave once Mike Seliger is confirmed as the new CFTC chairman. This leaves the agency, which was expected to have broader jurisdiction over cryptocurrencies, with only one Republican commissioner remaining.

"I don't think any senator would want to hand over such a large amount of power to this small body that currently has only one chairperson (instead of what should be a five-person committee)," Capon said.

The impending election and time pressure

Sources say the Senate's next move will be crucial. Cabon stated that once the Senate Banking Committee's bill is ready, passes a committee vote, and moves forward, it will need to be merged with the Senate Agriculture Committee's version and then voted on by the full Senate.

Then, the Senate's crypto market structure bill will need to be reconciled with the version passed by the House this summer, known as the Clarity Act.

"There are still too many steps to complete," Kabun said.

Kaban said he would be concerned if the Senate bill did not pass in January.

“They need to show progress right from the start,” Capon said. “So if I see both committees review it, see a compromise bill in the Senate, and we have the potential for a full Senate vote within the next six weeks, I’ll feel very good. If we don’t see that progress in January, I’ll be very pessimistic.”

Next comes the midterm elections, where some legislators will focus on their own campaigns.

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

"In terms of timeline, I think we're focused on the first half of next year, after which lawmakers will really focus on election matters," he said. "Then, perhaps around the end of 2026, after the election, there will be a small window of opportunity to push through this legislation."

Saga CEO Rebecca Liao (a former member of Joe Biden's 2020 presidential campaign team) stated that some Senate Democrats are indeed enthusiastic about the crypto market structure bill and want to see it pass. However, having enough time ahead of the midterm elections and another budget debate is a challenge. Congress temporarily provided funding to the government after ending a 43-day shutdown in November. This funding will last until January 30, 2026, but if a funding agreement is not reached again, the government will shut down again, suspending work on the crypto market structure bill.

Rebecca Liao stated that with the midterm elections approaching, Trump's cryptocurrency conflicts of interest may receive more attention.

"We're seeing Democrats building a real message around 'affordability,' so anything that comes across as privileged or implies improper benefits for the president and his administration will be repeatedly attacked in Democratic propaganda," she said.

Regarding what would happen if lawmakers ultimately fail to pass the Crypto Market Structure Act into law by 2026, Rebecca Liao stated that something must be done, especially given that financial institutions have already entered the digital asset space.

"For cryptocurrencies to really get adopted and used at scale, you really need regulatory clarity, so I think people will push for it again," she said.