Crypto braces for potential shift in congressional oversight after midterms

After years of pushing for legislation, the digital asset sector could find itself navigating a very different political landscape under a new Congress as a result of next week's midterm elections.

That could feel like whiplash as a new Congress shifts its focus from advancing digital asset legislation to ramping up oversight, while potentially revisiting a scaled-back version of the Clarity Act.

Over the past two years, a Republican-led Congress passed a stablecoin law dubbed the GENIUS Act and worked on the broader Clarity Act, which passed the House in 2025. That work stalled in the Senate amid multiple messes, including a fight over stablecoin rewards between banks and crypto, but ultimately got derailed over top Republican President Donald Trump's vast crypto wealth. That wealth had grown to hundreds of millions of dollars linked to World Liberty Financial and his TRUMP memecoin and became something many Democrats could not ignore in trying to pass the bill.

Sources who spoke with The Block said they expect the legislative dynamics to change for crypto, as polls show that Democrats have a high likelihood of taking back Congress. Bettors on prediction market platforms such as Kalshi put a 64% chance of the Democratic Party winning the Senate and a 90% chance of winning in the House.

"Forget politics, if you believe the prediction markets, one or both houses may become led by Democrats," former New York Governor Andrew Cuomo said in a call with reporters last week. "I wouldn't expect anything to happen in the lame duck Congress."

Cuomo is now a board director at crypto exchange OKX.

"I would hope that if there is a change in Congress, that they take up the Clarity Act, that they put politics aside just for a moment, act responsibly in the best interest of this country, which is to pass the Clarity Act so companies know the rules and regulations of the road," he added.

Sen. Angela Alsobrooks, D-Md., who was significantly involved in negotiations for the Clarity Act, said the will was there among Democrats to get the bill passed, but that Republican leadership was done negotiating, she told Puck News earlier this month. When asked whether a Democratic-controlled Congress would prioritize the Clarity Act, Alsobrooks said: "Absolutely not."

"I don't think that's realistic," Alsobrooks said, but also noted earlier that it could still happen in the lame duck period — the time after elections and before new lawmakers come into office.

Who will take charge?

Congressional committee chairs drive the agenda, and could soon have Democrats at the helm. Four major committees oversee the crypto industry — the Senate Banking Committee, the Senate Agriculture Committee, the House Agriculture Committee, and the Senate Agriculture Committee.

With Democrats likely to at least take the House or Senate, it becomes unlikely that crypto legislation will seep its way through those committees.

If Democrats take the Senate, Sen. Elizabeth Warren, D-Mass, would become Chair of the Senate Banking Committee. Last month, The Block asked in a call with reporters if she would take the lead on crypto legislation if she leads that panel.

"I'd be happy to sit down with other Democrats, with the Republicans, and with the industry and hammer out a meaningful crypto bill that protects our national security, that protects our economy and that dials back the corruption," Warren said. "I think we could get that done, but it will require the Republicans' willingness to stand up to Donald Trump — and that's a pretty tall order."

In that position, Ron Hammond, head of policy and advocacy at Wintermute, said he expects Warren to use subpoena power and be aggressive.

"The question is not legislatively what she can do that's damaging because a lot of that would have to get signed by the president," Hammond said in an interview with The Block. "But you can say that she will pretty much kill any positive or even helpful things for the industry."

Specifically, Warren could hone in on the Office of the Comptroller of the Currency's approval of de novo bank charters like Ripple, Coinbase and Trump-family-run World Liberty Financial, Hammond said.

Ohio

One of the major races in crypto to watch is Ohio, where former Senate Banking Committee Chair Sherrod Brown is facing off against crypto-friendly Republican Jon Husted. Following the fallout of the Clarity Act vote in the Senate, major Fairshake political action committee said it was committing $30 million to back Husted against Brown.

Brown could become Chair of the Senate Agriculture Committee if he wins, given his seniority, Hammond said. As Chair of the Senate Banking Committee, he called for a crackdown on the use of cryptocurrency to fund terrorism and evade sanctions and has generally taken a critical stance on crypto.

Both the Senate and House Agriculture Committees are viewed as being more partisan compared to the Senate Banking Committee and the House Financial Services Committee. In any case, Brown's spot could put any crypto legislation that comes out of the House Agriculture Committee on ice, Hammond said.

As Chair, Brown criticized a crypto market structure bill in 2022 called the Digital Commodities Consumer Protection Act, which had become closely associated with now-jailed former FTX CEO Sam Bankman-Fried, and was delayed and ultimately fell through.

On the House side

The biggest point of contention over the past several weeks has been who will lead the House Financial Services Committee if Republicans lose that chamber, leaving current Republican Chair French Hill out of his top spot.

Top Democrat Maxine Waters led the committee previously and was expected to take up the spot again in case of a flip, but has since been challenged by Democratic Reps. Sean Casten and Bill Foster. Some Democrats have signalled that they want "generational change," given that Waters is 88 years old and Casten is 54, according to reporting from Politico.

In any case, the Clarity Act won't happen no matter which Democratic chair leads the committee, Hammond said. Waters, for her part, worked on the GENIUS Act and got close to the industry in learning about the issues, Hammond said. However, she has since criticized the industry following the collapse of crypto exchange FTX and later, Trump's crypto interests.

"But overall, we would probably see more of the same that we've seen from her in years prior," Hammond said. Foster is also similar to Waters, Hammond said.

Casten would take a more aggressive stance on crypto, he said.

"If he were somehow to win the financial services top slot, I would expect a very heavy focus on oversight and a very heavy focus on the crypto side," Hammond said. "Not saying that Maxine Waters is going to do that already, but I think there would be especially a heavier bend if Casten were to take it."

House Democrats could decide to work with Republicans on a skinnier version of a crypto regulatory bill, but that would likely be paired up with the party's priorities so would not align with Republicans, Hammond said. At the end of the day, Trump would still have to sign off on it.

The Blockchain Association says either way Congress flips, they are still committed to getting legislation passed into law.

"Control of Congress may change," said Chief Policy Officer Lindsay Fraser in a statement. "The need for clear crypto rules won't."