Democrats winning majorities in both chambers of the U.S. Congress makes it harder for the Clarity Act, expected to establish a regulatory framework for the crypto market, to pass in its current form, while experts believe the bill could be reworked from scratch.
Crypto market analyst Mati Greenspan, speaking to CoinDesk, said the election result could be the final blow to the bill in its current form. Greenspan believes crypto may be back at square one on the legislation, which failed to pass a procedural vote even in September, when Republicans controlled both chambers of Congress.
The bill, which aims to determine how crypto assets and companies operating with them will be regulated, is at the heart of a long-awaited legal framework. Stefan Muehlbauer, CertiK’s head of U.S. government relations, also sees little chance of the current text advancing.
The sticking point: rewards for customers holding dollars
One major disagreement holding up the bill is whether crypto exchanges can offer rewards to customers holding dollar-backed stablecoins. Banks oppose the practice, concerned it could draw deposits away from traditional bank accounts.
Forte executive Anton Golub said Republicans failed to resolve this dispute between banks and crypto companies while they controlled Congress. According to Golub, the new political balance makes it even harder for the same text to become law.
According to figures shared by Golub, crypto-linked political action committees spent about $170.5 million in the elections, at least $125.5 million of which went toward spending on Republicans. Despite the large election budget, disagreements over stablecoin rewards and conflicts of interest persist.
Two-party compromise remains possible
Brent Fulfer, co-founder of venture capital firm TBV, does not attribute the bill’s impasse solely to the Democrats’ victory. Fulfer argues that the real blow came with the failed vote in September, when Republicans controlled the Senate.
Fulfer noted that more than 70 Democratic members of the House of Representatives supported the bill. In his view, a compromise between the two parties and the addition of safeguards against conflicts of interest could pave the way for more lasting legislation.
Scrutiny of crypto companies may intensify
Muehlbauer expects crypto companies and Donald Trump’s crypto ties to face greater scrutiny under the new Congress. Anti-money laundering, cybersecurity and consumer protection are seen as among the main subjects of potential hearings and investigations.
Jason Fernandes, founder of AdLunam, believes there is room for crypto companies to work with Democrats. Fernandes argues for supporting measures against bad actors without punishing the entire crypto industry for the actions of a few. Whether common ground can be established in the new Congress will be a decisive issue for the bill’s future.
Not investment advice.