US Crypto Rules Hang in the Balance as Midterms Approach

The rapid growth of digital assets is reshaping the financial landscape, but the United States lacks clear, long-term rules to guide this transformation. The CLARITY Act, designed to create a national framework for digital assets and clarify the roles of agencies like the SEC and CFTC, was passed by the House in 2025 but stalled in the Senate. In the absence of congressional action, federal agencies have stepped in with new regulations, restructuring the market. However, these rules are politically vulnerable, as they were adopted without legislative backing and could be overturned after the next election.

The upcoming midterms could shift power, with Democrats having a 64% chance of controlling the Senate. Historical precedent suggests that a change in congressional control could lead to intensified oversight and challenges to existing agency actions. Democrats may scrutinize regulations enacted by the Trump administration, potentially derailing them through legislative tools like the Congressional Review Act or funding limitations.

The lack of a durable regulatory framework creates uncertainty for businesses, investors, and consumers. Without clear rules, companies must navigate a volatile landscape where legal and regulatory landscapes could change with each election cycle. Other countries, such as Europe with its MiCA regulation and Singapore with its Payment Services Act, are already establishing stable frameworks, positioning themselves as leaders in financial innovation. The author argues that the U.S. must prioritize bipartisan legislation to provide regulatory certainty and foster innovation while protecting consumers and investors.