Cryptocurrency players have entered the US general election to gain influence and shape policy outcomes. At $238 million, their campaign spending easily outstripped the election budgets of the oil and pharmaceutical industries.
The industry has sided with “crypto candidate” Donald Trump, demanding an end to punitive regulations and pouring millions of dollars into bipartisan legislative campaigns.
Now, crypto is poised for a big payoff as the dust finally settles after a high-stakes battle. According to Stand with Crypto, an industry political action committee, 271 pro-crypto candidates have been elected to Congress, compared to 122 anti-crypto candidates.
Trump's victory is the crown jewel of the new era, as the "crypto bros" also lead the Senate 19-12. Coinbase CEO Brian Armstrong described the incoming panel as the most pro-crypto Congress the United States has ever seen.
“Americans are extremely interested in cryptocurrencies and want clear rules for digital assets,” Armstrong said via X. “We look forward to working with the new Congress to make that happen.”
It's also a reminder from one of the biggest election donors that new congressional representatives have promises to keep.
Some prominent crypto investors like Dave McCormick, who defeated Bob Casey in Pennsylvania, are entering Congress with a predetermined agenda to push the crypto narrative.
Two weeks ago, responding to Coinbase CEO’s confirmation, McCormick said: “We need leaders in Washington to recognize that blockchain and cryptocurrency are an economic engine.”
Optimism as Crypto Believers Enter Congress
The US shift is being hailed as a global turning point for the cryptocurrency sector.
Dave Rademacher, co-founder of OilXCoin, a digital asset backed by natural gas and oil reserves, told Cryptonews that other countries could follow suit if the United States becomes more supportive of cryptocurrencies.
That's because "other countries often look to the United States when building their own frameworks," he said, adding:
“With tighter regulatory cohesion, the global cryptocurrency market could gain stability and increase investor confidence, making it a more popular choice in global finance.”
Trump was greeted with cheers of approval after he told the audience at the Bitcoin 2024 conference in Nashville that he would fire U.S. Securities and Exchange Commission (SEC) chief Gary Gensler on his first day in office.
“I didn’t know he was so unpopular,” Trump exclaimed at the conference in July.
Crypto companies like Coinbase are furious with Gensler, who has taken 53% more enforcement actions against the crypto industry in 2023 than the previous year.
How Gensler Became Crypto's Number One Boss, and Why Is His Commission So Controversial? The SEC is responsible for regulating investment contracts, including some forms of crypto assets.
“Currently, token issuers are facing uncertainty from the SEC, as tokens sold as part of investment contracts can be classified as securities,” Nikita Prokopenko, a crypto lawyer at law firm SBSB, told Cryptonews.
“This ambiguity has led many issuers to rely on registration exemptions, but they still risk being subject to SEC action,” he added.
In 2019, the SEC published controversial guidance for cryptocurrency companies. At the time, an anonymous person interviewed by Fortune argued that the SEC’s guidance failed to acknowledge how cryptocurrency tokens, which are used for both digital transactions and speculation, differ from other assets.
The Securities and Exchange Commission has been accused of pushing smaller cryptocurrency companies to set up shop outside the US by tightly regulating tokens and seemingly pursuing a punitive agenda.
Bigger figures who have stood their ground have not escaped legal action either, with former Binance CEO Changpeng Zhao spending months in prison as his company paid a fine of more than $4 billion.
New Congress Will Break Through Regulatory Opacity
In addition to the individualization of cryptocurrency management issues, it may be necessary to reconsider the complexity of the regulatory structure in the United States.
Federal agencies like the SEC and the Financial Crimes Enforcement Network (FinCEN) provide federal-level oversight of cryptocurrency tokens, while state-level requirements like New York’s BitLicense and Money Transmitter License (MTL) include another layer of regulation.
Prokopenko explained that each state has the constitutional right to implement its own regulatory framework, “adding complexity to businesses operating across the country.”
To provide crypto-related services as a crypto asset service provider, one must obtain MSB permission, MTL permission, or both. No registration or licensing is required to issue tokens.
“With a pro-crypto administration and a Congress more favorable to crypto assets, we can see an increasing focus primarily on regulatory reforms at the federal level,” said Prokopenko.
State-level regulation may still be patchy, he noted. But there's no guarantee of overnight perfection.
“While the new Congress may push FinCEN to simplify registration requirements for MSBs handling cryptocurrencies, we do not expect any groundbreaking changes,” Prokopenko said.
“At the federal level, there will likely be a shift toward reducing compliance burdens, which could encourage platforms like OKX, which currently do not operate in the United States, to consider entering the market,” he added.
The crypto lawyer continued:
“But it is unlikely that the US will adopt a unified legal framework similar to the European Union’s Markets in Cryptoassets (MiCA) regulation due to state constitutional autonomy.”
Prokopenko said one area where a pro-crypto Congress could bring meaningful change is in the governance of token issuers.
“With a more crypto-friendly Congress and administration, we could see the emergence of a federal registration or licensing system for token issuers,” he told Cryptonews, adding:
“Such a framework could provide much-needed clarity for token issuers, reducing the risk of sudden SEC enforcement. By registering or licensing tokens up front, companies would have assurance that their tokens are compliant, fostering a more predictable environment for innovation in the U.S. crypto space.”
Rademacher, co-founder of OilXCoin, said it was too early to assess the impact of the new Congress on existing crypto regulations. However, he expressed optimism about clearer laws, especially for asset-backed tokens.
“Given the current gray areas surrounding real-world assets (RWAs), it would not be surprising if Congress began to identify policies that highlight their lower risk profile and support for real-world assets,” said Rademacher.
“This could be a positive change, making RWAs more attractive to investors looking for reliable asset-backed options in the digital space.”
He hopes a pro-crypto Congress will also focus on “clearer guidelines for tokenizing assets — especially in areas like asset verification, transparency, and audits.”
Beware the old guard
There may be some pushback from Congress from crypto believers. Some of the old anti-crypto guard will still be there and they may still fight back.
Elizabeth Warren, who has been a senator since 2012, is known for her opposition to cryptocurrencies. In a video shared via X, Warren said that despite her Republican votes, she will do her best to ‘fight’. This could potentially extend to cryptocurrency legislation.
“I can’t tell you that we’re going to win all of those battles. I can’t tell you that we’re going to win most of them or even any of them,” Sen. Warren said. “But when we get to each of those moments, we’re going to be faced with the choice of giving up or moving forward.”
Warren is no stranger to one-sided battles, especially when it comes to cryptocurrencies. In February 2024, she tried to push a narrative that cryptocurrencies were being used for terrorist activities, and more recently, she took the fight to cryptocurrency betting sites like Polymarket.
More importantly, crypto skeptics at the top of the Democratic Party are likely to disrupt bipartisanship on crypto.
This could even come from something as predictable as Republicans refusing to vote with Democrats on an issue unrelated to crypto. Senator Warren defeated crypto lawyer and Republican candidate John Deaton in Massachusetts.
The President-Elect Is a Crypto Guy
Since Donald Trump was elected the 47th President of the United States, Bitcoin has hit a record high of $89,000, soaring as much as 35% in just a week since the November 5 election.
At the Nashville Bitcoin Conference in July, Trump said: “If I am elected, it will be the policy of my administration, the United States of America, to retain 100% of the Bitcoin that the United States government currently holds or acquires in the future.”
While there would be constitutional and legislative hurdles, a pro-crypto Congress could see Trump closer to his design – a national Bitcoin reserve.
Despite receiving the bulk of the $22 million donated from players in the cryptocurrency and digital asset industry, Trump was careful not to mention the plan’s potential for blockchain technology as a centralized means of exchange, which is endorsed by the Federal Reserve.
