Can the US crypto legislation pass before the midterm elections?

Source: The Block

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

Translation and compilation: BitpushNews

The next year will be crucial for cryptocurrency legislation, with the core issue 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 a bill 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 Head 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. The Senate Banking Committee already has a draft that aims to delineate jurisdiction between 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, responsible for overseeing the CFTC, released its own draft legislation last month, which would grant the agency new powers. The two committees’ versions need to be integrated into a unified bill.

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

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

( Controversies and Key Issues

Sources indicate that there are several pain points in the crypto market structure bill that need resolution.

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 Position: Banking trade groups say that the “GENIUS Stablecoin Act,” which became law this summer, failed to address key loopholes. They argue that the regulation did 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 Position: In contrast, crypto advocates believe that the ability to earn yields on stablecoins simply represents fair and healthy competition.

DeFi Regulation and Jurisdictional Issues

Cody Carbone, CEO of the Digital Chamber of Commerce, points out that another issue is how to regulate decentralized finance, especially regarding anti-money laundering measures for DeFi protocols, and whether certain tokens should fall under SEC or CFTC jurisdiction. He added that, given the SEC’s more critical stance on cryptocurrencies under former Chair Gary Gensler, industry players are concerned that the SEC might become the sole decision-maker.

“I want to say that I’ve heard from the industry that if legislation makes the SEC the primary decision-maker on whether a token is a security or a commodity, that’s very concerning because it looks like going down the same old path with Gary Gensler, where the SEC is the only police on the street deciding everything,” Carbone 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 profited about $620 million from his family’s crypto ventures, including World Liberty Financial DeFi and stablecoin projects co-founded by Trump and his three sons. The family also owns a 20% stake in Bitcoin mining company American Bitcoin. Lawmakers have also repeatedly raised concerns about Trump’s launch of freely circulating meme coins TRUMP and MELANIA just before his inauguration.

Cynthia Lummis, a 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 has been involved in discussions about ethical provisions. Lummis said she and Democratic Senator Ruben Gallego submitted draft language to the White House, but it was returned.

CFTC Personnel Vacancies

Carbone noted that vacancies at the CFTC are also under review and have become a bargaining chip for Democrats.

Over the past year, four CFTC commissioners—Democrats Christine Johnson and Kristi Goldsmith Romero, and Republicans Caroline Pham and Summer Mersinger—have left or announced plans to leave the agency. Republican Pham is currently acting chair but has said she plans to step down once new CFTC Chair Mark Seilig is confirmed. This leaves the agency, which is expected to have broader jurisdiction over cryptocurrencies, with only one Republican commissioner.

“I don’t think any senator is willing to hand over such significant power to this small agency, which currently has only one chair (when it should be a five-member commission),” Carbone said.

) Approaching Elections and Time Pressure

Sources say that the next steps in the Senate will be very critical. Carbone stated that once the Senate Banking Committee’s bill is ready, passes committee votes, and advances, 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 also need to be coordinated with the version passed by the House this summer (called the “Clear Bill”).

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

He expressed concern that if the Senate’s review does not happen in January, it would be problematic.

“They need to show progress right out of the gate,” he said. “So, if I see both committees conducting reviews, a compromise bill emerging in the Senate, and the possibility of a full Senate vote within the next six weeks, I would feel very optimistic. If there’s no progress in January, I would be very pessimistic.”

Following that, the midterm elections will focus some legislators on their campaigns.

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

“From a timeline perspective, I think our focus is on the first half of next year, and then lawmakers will really focus on election matters,” he said. “Then, perhaps around the end of 2026, before or after the holidays, there might be a small window of opportunity to push this legislation after the elections.”

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 the crypto market structure bill and want to see it pass. However, with midterm elections and another budget debate ahead, having enough time remains a challenge. After a 43-day government shutdown in November, Congress temporarily funded the government until January 30, 2026. If no new funding agreement is reached, the government will shut down again, halting work on the crypto market structure bill.

Liao said that as midterm elections approach, Trump’s crypto conflicts of interest may garner more attention.

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

As for what happens if lawmakers ultimately fail to pass the crypto market structure bill into law in 2026, Liao said action must be taken, especially considering that financial institutions have already entered the digital asset space.

“To truly achieve adoption and widespread use of cryptocurrencies, you really need regulatory clarity, so I think there will be renewed push for it,” she said.