US Midterm Elections on the State of Crypto

On Nov. 8, the U.S. midterm elections will determine not only the composition of the U.S. Congress but also the future of crypto legislation.

US Midterm Elections on the State of Crypto

The House of Representatives and Senate representatives are elected every two years. These houses are law-making bodies that, among else, also create crypto legislation, an important waitlist item in the mid-term.  

Crypto legislation and bipartisanship in Congress

Bloomberg reports that Republicans could gain a majority in the houses based on pollster numbers. As long as Biden leads for at least two more years, legislation regarding virtual assets may remain partisan in Congress and in the government.

Mike Conaway, former chairman of the House Agriculture Committee, expressed optimism that negotiations would not be derailed. Although there will be a divided government in the coming year.

In an interview with the media outlet, Conaway stated that most aspects of the cryptocurrency industry have remained relatively bipartisan. The President stated that approving this legislation would be an "easy triumph" for the White House. Congress would demonstrate to the public that Democrats and Republicans are still capable of working together.

Contributions to crypto lobbying by-elections

According to a recent report by OpenSecrets, which was cited by The Wall Street Journal, crypto companies and their employees contributed $73 million to the 2022 elections. Compared to $13 million in the 2020 cycle. In addition, the industry has spent more on lobbying in the first nine months of this year ($15 million) than in the previous eight years combined.

“These midterms are the most significant elections for this crypto community,” Hermine Wong, policy director at Coinbase, told WSJ, adding, “We believe that the legislators who will be coming in this cycle will be able to finally draft legislation to govern this space.”

Cryptocurrency political action groups (PACs) have also been active in this election. Despite the fact that many crypto supporters have emerged, only a few have participated in the primaries for this election. As previously noted by analysts, they have also been distributed fairly.

2023 Legislation

Despite this, crypto and stablecoin regulations are expected to be finalized by the first half of next year. U.S. Representative Patrick McHenry (R-N.C.), a member of the House Financial Services Committee, is optimistic that stablecoin legislation will be passed soon.

Concerning regulations, Mauricio Di Bartolomeo, chief strategy officer, and co-founder at Ledn, told MarketWatch, “I don’t think that that would be a crypto-specific issue. I think it’s going to slow down regulation in general."

Representative Pete Sessions of the Republican Party has reportedly stated that the White House does not require Congress to take any action regarding digital assets legislation at this time.

Recently, the House of Commons approved a parliamentary proposal to regulate crypto under the banner of financial services. The Financial Stability Oversight Council (FSOC) requested Congress to address the risks associated with crypto assets and close loopholes in crypto legislation in October.

Biden signed an executive order earlier this year. It focuses on "Ensuring Responsible Development of Digital Assets." Nevertheless, regulatory gaps regarding trading and supervision remain. The Commodity Futures Trading Commission and the Securities and Exchange Commission have not yet established an official division of responsibilities to oversee this sector. It is therefore essential to decide the course of crypto regulation during the elections and in the coming year.

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