U.S. Senate shift clouds path for crypto regulation

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Senate shift and crypto regulation

Highlights

Democrats and aligned independents secure 51 seats in the U.S. Senate after Josh Turek wins Iowa, shifting legislative dynamics for crypto regulation.
The CLARITY Act fails a Senate procedural vote 49 to 50 in September and must restart in the next Congress if not passed by January.
Industry leaders warn that bipartisan support remains essential for durable crypto regulation, with partisan divides risking policy stagnation and delayed progress.

Senate majority changes crypto policy outlook

As reported by Cointelegraph, citing the Associated Press, Democratic control is secured after Democrat Senator Josh Turek wins the Senate race for Iowa, lifting Democrats and aligned independents to 51 seats in the chamber.

The shift reshapes expectations for the CLARITY Act, which fails a Senate procedural vote 49 to 50 in September. If the bill is not passed by January, the next Congress starts again from scratch, leaving the blockchain industry to renew its case for legislation.

Control of the Senate also influences which lawmakers lead committees overseeing the industry and could affect confirmation of future presidential nominees to regulatory posts. Democratic control could also bring greater congressional scrutiny of Trump-linked crypto businesses and of regulators' decisions.

Industry warns bipartisan support remains essential

Jerome de Tychey, president of Ethereum France and co-founder of EthCC, says it is still too early to define the full implications for crypto but argues that no legislation will pass without support from both parties. He adds that some Democratic demands, including conflict-of-interest rules and customer protection obligations, could strengthen the industry's regulatory framework.

De Tychey says Europe already operates with such standards under the European Union's Markets in Crypto-Assets regulation, or MiCA. He also warns that the biggest risk for crypto in America is for policy to become entrenched as a partisan issue, which he says could set the U.S. back several years.

Fred Hsu, co-founder and chief executive of D3 and a core contributor to Doma Protocol, similarly says durable regulation requires backing from both parties. He says the midterms show the industry cannot rely on one political party alone and should be making its case to lawmakers on both sides.

Our earlier report on the final weeks of the U.S. midterm campaign described how Republicans ramped up advertising spending as polls tightened, with once-safe Senate and House races becoming more competitive. It also noted how high fuel costs and broader affordability concerns were shaping voter sentiment and forcing both parties to shift resources into key battlegrounds, including Iowa.

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