Trump is suffering a string of crushing political defeats. Is the scenario the crypto industry has long feared about to unfold?
Written by KarenZ, Foresight News
If the 2024 U.S. presidential election showed the crypto industry the potential for political investments to translate into tangible policy wins, the 2026 midterm elections delivered an unexpected political twist.
Two years ago, the crypto industry poured massive funds into supporting pro-crypto candidates, and Trump pledged to make the U.S. the global hub for cryptocurrency. Since then, the GENIUS Act has been signed into law, regulatory reforms have been advanced by the administration, and industry expectations for policy tailwinds have steadily risen.
Yet just two years later, the power dynamic in Washington has shifted dramatically.
On November 4, according to Associated Press reporting, in the U.S. midterm elections, Democrats not only reclaimed the House of Representatives but also secured a majority in the Senate, gaining full control of both chambers of Congress. Trump’s legislative agenda for the next two years will now face far steeper headwinds.
For the crypto industry, the result from Ohio is particularly dramatic: Sherrod Brown, who was targeted with massive crypto political spending during his 2024 re-election loss, has now defeated Republican Senator Jon Husted to return to the Senate.
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Meanwhile, Elizabeth Warren, a long-time vocal critic of the crypto industry, is positioned to become the next chair of the Senate Banking Committee, giving her significant sway over financial regulatory legislative agendas.
That said, there are also Democratic lawmakers who have supported the GENIUS Act, the CLARITY Act, and digital asset market structure legislation. The new core question is: can the cross-party support the industry has built up so far translate into the vote counts required to pass the next round of legislation?
Do Crypto-Supporting Democrats Still Stand Behind Crypto Legislation?
To gauge how Democrats will shape crypto policy, it is helpful to first examine how sitting and incoming lawmakers have voted on related measures in the past.
In June 2025, the stablecoin bill GENIUS Act passed the Senate with a vote of 68 in favor and 30 against, including support from 18 Democratic senators. In July of the same year, the crypto market structure bill CLARITY Act passed the House with a 294-134 tally, with 78 "yes" votes coming from Democrats.
This means the support the industry has cultivated has always crossed partisan lines.
New York Democratic Senator Kirsten Gillibrand is a leading Democratic lawmaker behind the GENIUS Act. As early as 2022, she partnered with Republican Senator Cynthia Lummis to introduce the Lummis-Gillibrand Responsible Financial Innovation Act.
Another Democratic Senator, Maryland’s Angela Alsobrooks, was also directly involved in stablecoin legislative negotiations. She was a co-sponsor of the early version of the GENIUS Act, and after the bill was signed into law, noted that she had negotiated provisions to preserve state consumer protection laws and safeguard community bank interests. She supports building a regulatory framework for stablecoins, while requiring that consumer protections and the interests of the traditional banking system be adequately accounted for.
Her focus on banking interests carried over to subsequent negotiations. According to a Forbes report reprinted on her office’s website, in May 2026, she reached a compromise with Republican Senator Thom Tillis on stablecoin yield provisions in the CLARITY Act. The compromise would ban rewards that are economically equivalent or functionally identical to bank deposit interest, while leaving room for rewards tied to legitimate, eligible platform activity. This compromise remains part of ongoing legislative negotiations and should not be treated as an active, enforceable ban.
These lawmakers are willing to support innovation, but will also require bills to account for the interests of consumers and the traditional banking system. Supporting crypto legislation does not mean accepting every demand put forward by the industry.
In this election, Georgia Senator Jon Ossoff and Virginia Senator Mark Warner, both of whom voted in favor of the GENIUS Act, won re-election. Among newly elected lawmakers, Republicans Andy Barr and Harriet Hageman have previously supported related crypto bills, while Democrats James Talarico and Troy Jackson have publicly backed clear regulatory guardrails.
The Most Intractable Dispute: Can the President Set Rules While Holding Conflicting Financial Interests?
The stance of re-elected Virginia Senator Mark Warner best illustrates the conditions attached to Democratic support for crypto legislation.
On May 8, 2025, he argued the text of the GENIUS Act was not yet finalized and should not be rushed to a vote. By May 19, he backed the revised version, arguing the bill was imperfect but still a marked improvement over the status quo. Notably, in the same statement where he announced his support, he also sharply criticized the Trump family’s crypto business ventures.
Once CLARITY Act negotiations got underway, he remained committed to advancing the legislation. A July 2026 Forbes opinion column quoted his remarks at a hearing, where he said he had "had enough of crypto hell", wanted the U.S. to lead the development of digital assets, and warned of the risks of poorly drafted regulatory rules.
Yet on September 15, Warner voted against the procedural motion to advance the CLARITY Act. He explained that while negotiations had nearly reached breakthroughs on issues like law enforcement and national security, the unresolved issue of presidential conflicts of interest remained: administration policies could directly impact the value of the president’s own crypto holdings, so enforceable, binding ethical safeguards must be included in the bill.
Even after casting his "no" vote on the version of the bill, Warner noted he remained open to continued negotiations. On September 16, he joined six other Democratic senators, including Gillibrand, Alsobrooks, and Gallego, in a joint statement that framed the legislative setback as a routine hurdle in the lawmaking process. The group reaffirmed their commitment to pursuing bipartisan crypto legislation that includes provisions for consumer protection, crackdowns on illicit activity, and guardrails to address conflicts of interest among elected officials.
Judging by these public stances, supporting the creation of a regulatory framework is only the starting point of negotiations. How much regulatory certainty companies receive, and how tightly officials’ personal financial interests are constrained, will shape final vote outcomes.
With Democrats controlling Congress, these types of controversies are more likely to be prioritized in hearing and investigation agendas. Congress holds the authority to oversee the executive branch and investigate business practices, and can require relevant entities to explain the links between policy decisions and private commercial interests.
As a result, crypto business ventures closely tied to the president’s personal commercial interests are likely to face mounting pressure from conflict-of-interest reviews going forward. According to Fortune, with Democrats taking control of Congress, WLFI may be the first target of investigations into the Trump family’s crypto business operations.
Elizabeth Warren May Take the Helm of the Banking Committee
If Warner’s stance outlines the conditions required to win over some Democratic support, Elizabeth Warren’s likely chairmanship means these requirements will be positioned to directly shape legislative agendas.
Elizabeth Warren currently serves as the ranking Democratic member on the Senate Banking Committee. With Democrats holding a majority, she is widely viewed as the frontrunner to become the committee’s chair.
The significance of the chair role lies in the ability to set what the committee discusses, what issues it investigates, and under what terms bills are advanced. Even if the industry retains a base of legislative supporters, it cannot ignore the shift in agenda-setting power.
Elizabeth Warren holds a hardline regulatory stance on the crypto industry. Her core concern is that companies leverage the label of "financial innovation" to gain policy legitimacy while shouldering far less accountability than traditional financial institutions. In 2025, she laid out five core principles that crypto market structure legislation should follow: upholding securities laws, protecting investors, safeguarding financial stability, enforcing anti-money laundering and sanctions requirements, and preventing public officials including the president from profiting from crypto assets.
These priorities are also reflected in her positions on specific bills. During debate over the GENIUS Act, she argued the then-current version had critical flaws around consumer protection, financial stability, national security, and presidential conflicts of interest, and pushed for revisions before the bill could advance. In her view, legislation that expands the stablecoin market without building sufficient guardrails would ultimately amplify systemic risks.
Ahead of the September 2026 CLARITY Act vote, she again opposed advancing the then-current version of the bill. Her criticisms touched on both Trump’s personal crypto interests and broader regulatory concerns: she warned companies could tokenize assets to evade securities laws, banks could expand high-risk crypto operations, and law enforcement capacity to crack down on illicit financial activity could be weakened.
As a result, if Warren becomes Senate Banking Committee chair, the industry should expect to face stricter compliance and conflict-of-interest requirements as it works to secure regulatory certainty. Based on her public stances, whether a bill strengthens regulatory guardrails will be the key factor in winning her support.
What Should the Industry Reassess?
The new cohort of lawmakers will begin their terms in January 2027. The election has reshaped the composition of the future Congress, but Trump remains president for now, and the executive branch will not automatically change leadership just because control of Congress has flipped.
Democrats will be able to shape legislation, appropriations, oversight, and the confirmation of personnel appointments that require Senate approval, but they cannot use their majority to take over the day-to-day decision-making of regulatory agencies directly.
As a result, the impact will likely unfold in layers going forward. Stablecoin issuers, payment firms, and banks will first need to adapt to existing laws and implementing rules; trading platforms and issuance projects waiting for market structure legislation will continue to bear the costs of unclear regulatory boundaries; and business operations heavily reliant on Trump’s personal political influence will likely face greater scrutiny of their political ties.
Trump’s loss of congressional control delivers a clear lesson for the crypto industry: a president can open a door for an industry, but the rules that govern passage through that door must still be written line by line by Congress and regulatory agencies.
What deserves closer attention going forward is the set of conditions under which lawmakers who previously voted "yes" will be willing to cast their votes in favor again.