The United States' ultimate fight over crypto regulation: Can the comprehensive bill in 2026 break through the political deadlock?

As the 2026 U.S. midterm elections approach, a comprehensive bill aimed at fully regulating digital assets is at a critical legislative crossroads. According to crypto industry advocates told to The Block, the likelihood of this bill becoming law by 2026 is approximately 50% to 60%. Although bipartisan lawmakers are actively discussing, negotiations remain difficult over thorny issues such as stablecoin yield regulation, jurisdictional boundaries for decentralized finance, and conflicts of interest involving President Trump’s family’s crypto holdings. Coupled with CFTC personnel vacancies, government shutdown risks, and an urgent election timetable, this highly anticipated “Crypto Market Structure Bill” faces its most complex and crucial test since its inception. The outcome will directly determine the United States’ rulemaking authority and industry competitiveness in the future global crypto race.

Legislative Process: From Committee Drafts to a Long Road of Bicameral Battles

Currently, the U.S. Senate is working to advance a comprehensive bill designed to regulate the cryptocurrency industry thoroughly. The core of this legislative effort is to address a long-standing fundamental issue: the division of regulatory authority. Specifically, clarifying which digital assets fall under the jurisdiction of the Securities and Exchange Commission (SEC) versus the Commodity Futures Trading Commission (CFTC).

At present, there are two main versions of draft bills within the Senate. The version drafted by the Senate Banking Committee attempts to allocate jurisdiction between the SEC and CFTC and create a new “auxiliary asset” category to clarify which cryptocurrencies are not securities. Meanwhile, the Senate Agriculture Committee, responsible for overseeing the CFTC, released its own legislative draft last month, aiming to grant the agency new powers. These two committee drafts must ultimately be coordinated and merged into a unified bill before moving to the next stage.

Earlier, markets held some optimism that the Senate Banking Committee would hold hearings and revise the bill by the end of 2025, but that hope has now been dashed. However, a spokesperson for the committee stated that they now plan to “mark up” the bill in early 2026, and noted progress with Democrats. The spokesperson said: “Chairman Scott and the Senate Banking Committee have made solid progress with Democratic colleagues on bipartisan legislation for the digital asset market structure. The committee continues negotiations and looks forward to a markup in early 2026.”

A “markup” is a key step in the legislative process, where committee members amend and vote on the bill line-by-line. Smooth progress at this stage is seen as the first important litmus test for the bill’s viability. As Cody Carbone, CEO of the Digital Chamber of Commerce, put it: “They need to show progress right out of the gate. So if I see both committees doing a markup in January, and the Senate reaching a compromise bill, and we might have a Senate floor vote within the next six weeks, I’ll be very optimistic. If we don’t see that in January, I’ll be very pessimistic.”

Core Disagreements: How Four Major Issues Block Consensus on Crypto Legislation

Despite some willingness to cooperate across party lines, several deep disagreements within the bill, like solid reefs, hinder the legislative vessel’s progress. These disagreements involve not only technical details but also fundamental conflicts of interest between traditional finance and the emerging crypto sector.

The first major sticking point centers on stablecoin regulation, especially interest-bearing stablecoins. Existing regulations, such as the GENIUS Act, leave critical loopholes in the banking sector’s view. They specifically point out that the regulations do not adequately prohibit issuers from offering interest on stablecoins. This “oversight” could transform stablecoins from simple payment tools into savings and credit instruments, creating what traditional banks call “distorted market incentives.” Crypto advocates counter that allowing stablecoins to generate yields is simply a matter of fair and healthy competition. The core of this debate is the first direct clash between the emerging cryptocurrency ecosystem and traditional banking over money creation and credit functions.

The second major issue concerns how to regulate DeFi. Specific questions include how anti-money laundering rules will be implemented for DeFi protocols and whether certain tokens should fall under SEC or CFTC jurisdiction. Industry concerns are high, especially if the final bill designates the SEC as the primary decision-maker on token classification. Carbone bluntly said: “Letting the SEC decide whether a token is a security or a commodity sounds a lot like going down the old path of Gary Gensler, where the SEC is the sole cop on the street deciding everything.” This concern stems from the SEC’s aggressive enforcement under the previous chair, and the industry generally hopes to delegate more authority to the CFTC, seen as more crypto-friendly.

2026 US Crypto Legislation Major Disputes

• Interest-bearing stablecoins: Banking sees this as distorting competition; crypto sees it as fair innovation.
• DeFi regulation and jurisdiction: How will AML rules be enforced? Are tokens SEC or CFTC property?
• Trump family conflicts of interest: The presidential family profited about $620 million from crypto projects, including DeFi, stablecoins, mining, and Meme coins.
• CFTC personnel crisis: Out of 5 commissioners, only 1 Republican remains, raising questions about the agency’s capacity and credibility.

The third major issue unexpectedly involves former President Donald Trump’s family. According to Bloomberg estimates in July, President Trump profited about $620 million from his family’s crypto ventures, including World Liberty Financial DeFi and stablecoin projects, which list him and his three sons as co-founders. The family also holds a 20% stake in Bitcoin mining company American Bitcoin. Lawmakers have also repeatedly expressed concern over the launch of the freely circulating TRUMP and MELANIA Meme coins just before Trump’s inauguration. Republican Senator Cynthia Lummis, involved in negotiations, revealed that the White House has discussed related ethical language, but the texts submitted by bipartisan lawmakers have been returned. As the midterm elections approach, this conflict of interest could become a focal point for Democratic attacks. Saga CEO Rebecca Liao said: “Anything with privileges or improper gains by the President or his officials will be repeatedly hammered in Democratic propaganda.”

The fourth major issue is the CFTC’s own personnel vacancy crisis. Over the past year, four CFTC commissioners—Democrats Kristin Johnson and Christy Goldsmith Romero, and Republicans Caroline Pham and Summer Mersinger—have resigned or announced plans to leave. Currently, Republican Pham serves as acting chair, but she has said she will leave once new Chair Mike Selig is confirmed. This means the agency, which will be granted broader crypto jurisdiction, may be left with only one Republican commissioner. Carbone believes this has become a strong bargaining chip for Democrats: “I don’t think any senator would want to hand over such significant power to a small agency that should be a five-person commission but now only has one chair.” The agency’s governance issues make proposals to expand its authority even more complex and controversial.

Time Window: Countdown Under Midterm Elections and Government Shutdown Risks

For crypto legislation, the year 2026’s calendar may be an even more formidable enemy than policy disagreements. All legislative efforts must obey a harsh political reality: the midterm election cycle. Anchorage Digital policy head Kevin Visoki clearly outlined this short window: “From a timeline perspective, I think our focus is on the first two quarters of next year (2026), after which lawmakers will really focus on elections. Then, perhaps before or after the holiday season in late 2026, there’s a small window of opportunity to push this legislation once the elections are over.”

This timeline is extremely tight. The Senate’s bill must first complete “markups” and votes in the Banking and Agriculture Committees, then be merged into a single version, and then pass a full Senate vote. After that, the Senate version must be coordinated with the House’s “Clarity Act,” which was passed in summer 2025, to reach final consensus before being sent to the President for signature. As Carbone lamented: “There are still many steps to complete.”

Another unresolved threat is the federal government shutdown risk. After ending a 43-day government shutdown, Congress passed a temporary funding bill in November 2025, which will last until January 30, 2026. If the two parties cannot agree on the budget by then, the government will shut down again, and all legislative work, including crypto bills, will be halted. This political brinkmanship repeatedly stalls important policy debates.

Therefore, January 2026 becomes a critical “weather vane” month. If bipartisan committees can, as promised, quickly initiate and complete the “markup” process in January, it will send a strong positive signal to markets, demonstrating that legislative momentum remains. Conversely, if January passes with inaction, the arrival of spring will see election politics rapidly consume everything, and the chances of passing the bill in 2026 will sharply decline. It’s a race against time and a concentrated test of Washington’s political will.

The Unfinished Road: What Will Happen to the U.S. Crypto Industry if Legislation Fails?

Faced with numerous obstacles, a practical question is: if this comprehensive market structure bill ultimately fails in 2026, where will the U.S. crypto industry go? Despite uncertain prospects, consensus within and outside the industry is that some form of regulatory clarity will eventually arrive because the demand is irreversible.

Rebecca Liao of Saga pointed out that, as traditional financial institutions have deeply entered digital assets, establishing a regulatory framework is no longer a question of “if” but “when” and “how.” She said: “To truly adopt and scale crypto technology, you do need regulatory clarity. So I think people will push for it again.” The legislative process may be delayed, but pressure from Wall Street, Silicon Valley, and an increasingly engaged voter base will not disappear.

Another possible scenario is that, if comprehensive legislation stalls, regulators may act in a more fragmented but potentially more aggressive manner under existing legal authority. SEC and CFTC might pursue enforcement actions and craft specific rules to further define their jurisdiction boundaries, but this “regulation through enforcement” approach has long been criticized by the industry and is something they hope to end. It creates uncertainty and could stifle innovation.

From a broader perspective, the U.S. crypto legislative battle is also part of a global contest for dominance over digital asset rulemaking. The EU’s MiCA framework has already taken effect, and other major economies are accelerating their efforts. If the U.S. cannot pass clear rules due to domestic political deadlock, it could lead to innovation and capital outflows, weakening its long-term competitiveness in the emerging digital economy. Therefore, the 2026 legislative effort is not only about industry rules but also about the U.S.’s strategic position in the next-generation internet and financial infrastructure race. Regardless of the outcome, the negotiations happening on Capitol Hill will resonate for years to come, shaping the destiny of every market participant.