In the upcoming U.S. congressional elections, the cryptocurrency industry has invested heavily, which may lead to more pro-crypto candidates being elected.
Written by: Sarah Wynn, The Block
Compiled by: Koala, Mars Finance
With cryptocurrency companies flooding funds into this election cycle, a large number of pro-crypto candidates could be elected on Tuesday.
The Senate races in Ohio and Montana could significantly impact the progress of cryptocurrency legislation next year.
Whether the Democrats or Republicans control the House and Senate will also determine who leads key committees that will play a leading role in regulating crypto and stablecoin legislation.
The cryptocurrency industry has injected a significant amount of funding into the U.S. congressional elections, which could have a substantial impact on legislation in 2025.
For instance, according to Open Secrets, Fairshake has raised over $200 million this election cycle to support key campaigns, with funding coming from major cryptocurrency companies like Ripple and Coinbase. Some of the biggest races to watch on Tuesday include the Senate contests in Ohio and Montana.
Proof of Stake Alliance Executive Director Alison Mangiero stated that there will be more seats occupied by pro-crypto individuals in Congress, which is a first for this election. The Proof of Stake Alliance is an advocacy organization for proof-of-stake technologies.
"Regardless of the outcome of each race, we are going to see the most pro-crypto Congress ever," Mangiero said in an interview with The Block. "There is still a lot of work to be done in terms of education and the industry, as we have invested so much in these campaigns, and the real work is just beginning."
Presidential candidates themselves have also expressed views on the crypto industry, a unique phenomenon in this election year. Vice President Kamala Harris stated that under her 80-page economic plan, her administration would encourage innovative technologies such as artificial intelligence and digital assets while protecting consumers and investors.
Former President Donald Trump has pledged to end the "illegal and un-American crackdown" on the American crypto industry and supports a crypto project called "World Freedom Finance."
Meanwhile, prediction markets have also played a significant role in this year's elections. Courts have ruled that the prediction market Kalshi can continue to offer election betting, and its markets have begun to go live. Meanwhile, as of November 1st, the decentralized prediction platform Polymarket saw its betting volume on who will win the U.S. presidential election surge to nearly $3 million. Notably, Polymarket does not operate in the U.S.
Analysts say prediction markets, like any market, are not always accurate but can effectively aggregate real-time public sentiment. The Block cited data from Kalshi to understand how the congressional elections may unfold. For reference, the latest polls from 538 show that Republicans have a 91% chance of taking the Senate, while control of the House is closer. According to 538 data, Republicans have a 51% chance and Democrats a 49% chance. All data was collected Monday morning.
The likelihood of the Republicans winning the Senate is 80%, and the Democrats' is 20%.
One of the most influential committees in the Senate is the Senate Banking Committee, which has jurisdiction over the SEC and the Commodity Futures Trading Commission. Both agencies are responsible for regulating cryptocurrencies. Currently, the committee is led by Ohio Democratic Senator Sherrod Brown, who has been critical of the cryptocurrency industry and is in a tough race against pro-crypto Republican candidate Bernie Moreno.
If the Senate shifts to Republican control, regardless of whether Brown wins the election, South Carolina Republican Senator Tim Scott could likely chair the Senate Banking Committee.
Scott is currently a senior Republican on the Senate committee and recently stated he supports the cryptocurrency industry. In August of this year, he proposed creating a subcommittee focused on the digital asset industry if he became chair. A spokesperson for Scott stated that if this happens, the congressman plans to develop a framework for regulating digital assets.
"Senator Scott will work to establish a regulatory framework to create a reliable pathway for the trading and custody of digital assets to promote consumer choice, education, and protection, and ensure compliance with appropriate Bank Secrecy Act requirements," a spokesperson said in an email statement to The Block.
Ron Hammond, Director of Government Relations at the Blockchain Association, stated that if Scott creates a subcommittee focused on digital assets, it could become a 'trailblazer' for future crypto legislation. For example, the House Financial Services Committee has a subcommittee focused on digital assets that has played a significant role in launching crypto bills.
"We can assume that with this subcommittee, the Senate would not only review the House's bills but could even initiate its own bills on stablecoins, market structure, or other anti-money laundering matters," Hammond said in an interview with The Block.
If the Democrats control the Senate, Brown is likely to continue as Chair of the Senate Banking Committee. However, if he loses the election and the Democrats still hold the majority, Massachusetts Democratic Senator Elizabeth Warren could become chair. However, this scenario is unlikely as Ohio is a swing state, so Democrats need to win other states to control the Senate.
"For Warren to become chair, there would have to be a lot of very unlikely scenarios," Hammond said.
Warren has consistently criticized cryptocurrencies, pushing for the crypto industry to comply with anti-money laundering rules and supporting a bill that would expand Bank Secrecy Act requirements, including Know Your Customer rules, to cover miners, validators, and wallet providers.
POSA's Mangiero said she expects legislators in a Republican-led Senate to be more willing to advance bills that have already been introduced. Two notable bills have gained support in the House—one focused on what is known as FIT21, the crypto market structure, and another focused on regulating stablecoins.
As for stablecoins, both Democrats and Republicans are eager to pass a bill. In the Senate, Tennessee Republican Senator Bill Hagerty introduced a draft bill in October that is very similar to the work currently being done in the House.
"If the Senate is led by Republicans, the likelihood of achieving this goal is greater," Mangiero said in an interview with The Block. "But I think Democrats are indeed willing to engage on stablecoin issues."
As for the possibility of a Democrat-led Senate passing market structure legislation to regulate cryptocurrencies, Mangiero stated, "Anything is possible."
The likelihood of the Democrats taking the House is 53%, with Republicans close behind.
The House Financial Services Committee has been key to cryptocurrency-related bills, with some having passed under its chair, North Carolina Republican Congressman Patrick McHenry, over the past few years. McHenry will retire in January 2025, leaving room for new leadership.
McHenry has played a key role in leading the efforts on stablecoin legislation and FIT21. McHenry stated in September that he believes his bill could gain momentum during the lame duck session, a period between the election and the swearing-in of the new Congress in January.
Hammond stated that regardless of which party wins the White House, they could win the House of Representatives. He added that the Chair of the House Financial Services Committee could also be elected in November or December. If the Republicans control the committee, nominees to lead it include Arkansas Congressman French Hill, Kentucky Congressman Andy Barr, Michigan Congressman Bill Huizenga, and Oklahoma Congressman Frank Lucas—all of whom are pro-crypto.
"Whoever the Republican chair is, if this work is not completed by the end of this year, their focus will likely be on stablecoins, and market structure, and then probably DeFi and NFTs until the end of their term in 2026," Hammond said.
If the Democrats take the House, California Congresswoman Maxine Waters may once again lead the House Financial Services Committee. Waters has sometimes criticized cryptocurrencies but is also very willing to let stablecoin legislation pass. At a congressional hearing in September, Waters called for a "grand agreement on stablecoins" by the end of the year.
"I have publicly stated bipartisan cooperation to you all—let's see what you will do," Waters told McHenry at that hearing.
"Therefore, if this work cannot be completed this year, she is likely to return to her old work," Hammond said. Waters did not respond to The Block's request for comment, which inquired about her priorities for cryptocurrencies if she were to chair the committee.
However, Hammond noted that Waters opposes FIT21, so the path for that specific bill remains unclear, but he added that it depends on whether Waters believes a regulatory framework is needed for digital assets.
The White House has expressed opposition to FIT21 but stated in a May release that it "looks forward to working with Congress to ensure a comprehensive and balanced regulatory framework for digital assets." Meanwhile, SEC Chairman Gary Gensler said that cryptocurrencies do not need new rules and called for crypto entities to register and comply with its regulations.
Hammond stated that tax legislation will also emerge in 2025, as lawmakers face a deadline next year when Trump's Tax Cuts and Jobs Act expires.
Hammond said, "When there is a major tax bill on the Hill, the entire tax issue comes into play." He added that crypto tax proposals will be part of the discussion. For example, part of the discussion may include a bill introduced by North Carolina Democratic Congressman Wiley Nickel and Georgia Republican Congressman Drew Ferguson, which would clarify that staking rewards should only be taxed upon sale.
Specific elections to watch
Hammond stated that the Senate race in Ohio may be the most significant. Another contentious race could be in Montana, where Democratic Senator Jon Tester will face off against Republican Tim Sheehy. Stand With Crypto gave Sheehy an A for his pro-crypto stance, while Tester received a C.
Notably, Tester is among the few Democrats who voted against the SEC announcement that set certain accounting standards for companies holding cryptocurrencies, including Senate Majority Leader Chuck Schumer, a Democrat from New York.
Overall, Hammond stated that after talking to candidates across the country, many seem to have a pro-crypto stance.
"The good news is that many campaigns have pro-crypto Democrats and pro-crypto Republicans," Hammond added. For instance, in the Senate race in Arizona, Republican candidate Kari Lake and Democrat Ruben Gallego both received an A rating from Stand With Crypto. News reports indicate that Fairshake provided millions in funding for Gallego's campaign.
POSA's Mangiero elaborated that next year will be "the most pro-crypto Congress ever." She stated that this will include those who identify as pro-crypto, but it also means that future lawmakers may be more open-minded.
"I also think you'll encounter at least somewhat more open-minded people, because they have to be educated on these topics to effectively govern the country," she said.
