Next Year Will Be the Most Pro-Crypto Congress Ever

With cryptocurrency companies seeing a surge in funding in this election cycle, a slew of crypto-friendly candidates are likely to be elected on Tuesday.

Senate races in Ohio and Montana could shape the course of cryptocurrency legislation next year.

Whether Democrats or Republicans control the House and Senate will also determine who will lead key committees that will take the lead on bills regulating cryptocurrencies and stablecoins.

The cryptocurrency industry is injecting a large amount of money into U.S. congressional elections, which could have a significant impact on legislation in 2025.

For example, Fairshake has raised more than $200 million to support key races this election cycle, with funding coming from major cryptocurrency companies like Ripple and Coinbase, according to Open Secrets Some of the biggest races to watch on Tuesday include Senate showdowns in Ohio and Montana.

For the first time in this election, more seats in Congress will be held by crypto supporters, said Alison Mangiero, executive director of the Proof of Stake Alliance, an advocacy group for staking-related technologies.

“Regardless of the outcome of each race, we are going to have 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 industry because we invest so much money in these races and now the real work is just beginning.”

In a unique phenomenon in this election year, presidential candidates themselves have weighed in on the crypto industry. Vice President Kamala Harris said her administration would encourage innovative technologies like artificial intelligence and digital assets while protecting consumers and investors under her 80-page economic plan.

Former President Donald Trump pledged to end the "illegal and un-American crackdown" on the U.S. crypto industry and supported a crypto project called World Free Finance.

Meanwhile, prediction markets also played a major role in this year’s election. A court ruled that prediction market Kalshi could continue to offer election betting, and its market went live. Meanwhile, decentralized prediction platform Polymarket saw bets on who will win the U.S. presidential race surge to nearly $3 million as of November 1. It’s worth noting that Polymarket doesn’t operate in the United States.

Analysts say prediction markets, like any market, are not always accurate, but can be effective in aggregating real-time public sentiment. The Block cited Kalshi's data for a look at how the congressional elections will unfold. For reference, the latest 538 poll gives Republicans a 91% chance of taking the Senate, while control of the House is closer. According to 538, Republicans have a 51% chance, while Democrats have a 49% chance. All data was collected on Monday morning.

Republicans have an 80% chance of winning the Senate, Democrats have a 20% chance

One of the most influential committees in the Senate is the Senate Banking Committee, which has jurisdiction over the Securities and Exchange Commission 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 fierce competition with Republican candidate Bernie Moreno, who supports cryptocurrency, in the state.

If the Senate flips to the Republicans, then Republican Sen. Tim Scott of South Carolina would likely take the helm of the Senate Banking Committee, whether or not Brown wins the race.

Scott, currently the top Republican on the Senate committee, has recently expressed his support for the cryptocurrency industry. In August, he proposed that if he were to chair, a subcommittee focused on the digital asset industry would be created. A spokesperson for Scott said that if that happens, the congressman plans to develop a framework for regulating digital assets.

“Senator Scott will work to establish a regulatory framework that creates a reliable pathway for the trading and custody of digital assets that promotes consumer choice, education, and protection, and ensures compliance with appropriate Bank Secrecy Act requirements,” the spokesperson said in an emailed statement to The Block.

Ron Hammond, director of government relations at the Blockchain Association, said that if Scott creates a subcommittee focused on digital assets, it could be a "pioneer" for future crypto legislation. For example, the House Financial Services Committee has a subcommittee focused on digital assets, which played an important role in launching crypto bills.

“We can assume that with this subcommittee, the Senate could not only consider the House bill, but could even initiate its own bills, whether it’s stablecoins, market structure, or other bills on anti-money laundering,” Hammond said in an interview with The Block.

If Democrats take control of the Senate, Brown will likely continue to chair the Senate Banking Committee. However, if he loses and Democrats still hold a majority, then Massachusetts Democratic Senator Elizabeth Warren could become chairman. However, this scenario is unlikely to happen because Ohio is a swing state, so Democrats would have to win other states to control the Senate.

“It would take a lot of very improbable circumstances for Warren to become chair,” Hammond said.

Warren, who has been critical of cryptocurrencies, is pushing the industry to comply with anti-money laundering rules and is backing 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 lawmakers in the Republican-led Senate will be more willing to move forward with bills that have been introduced. Two notable bills have gained traction in the House — one focused on crypto market structure known as FIT21 and the other on regulating stablecoins.

As for stablecoins, both Democrats and Republicans are eager to pass a bill. On the Senate side, Tennessee Republican Senator Bill Hagerty introduced a draft bill in October that is very similar to what the House is working on.

“If the Senate was led by Republicans, then it would be more likely to happen,” Mangiello said in an interview with The Block. “But I think there is a real willingness among Democrats to engage on the stablecoin issue.”

As for the possibility of the Democratic-led Senate passing a market-structuring bill to regulate cryptocurrencies, Mangiello said, “Anything is possible.”

Democrats have a 53% chance of taking the House, with Republicans close behind

The House Financial Services Committee has been key to cryptocurrency-related bills, with several passed over the past few years under the leadership of its chairman, Rep. Patrick McHenry, R-N.C. McHenry is set to retire in January 2025, leaving room for a new leader.

McHenry, who played a key role in leading the efforts for both the stablecoin bill and FIT21, said in September that he thought his bills could gain momentum during the lame duck session, the period after the election and before the new Congress takes office in January.

Hammond said whichever party wins the White House is likely to win the House of Representatives. He added that the chairman of the House Financial Services Committee could also be chosen in November or December. If Republicans take control of the committee, the nominees to lead it include Rep. French Hill of Arkansas, Rep. Andy Barr of Kentucky, Rep. Bill Huizenga of Michigan and Rep. Frank Lucas of Oklahoma — all of whom have a friendly attitude toward cryptocurrencies.

“Whoever the Republican chairman is, if it’s not done by the end of the year, their focus is going to be on stablecoins, and market structure, and then probably DeFi, NFTs, until 2026, the end of their term,” Hammond said.

If the Democrats take the House, California Rep. Maxine Waters may once again lead the House Financial Services Committee. Waters has sometimes criticized cryptocurrencies, but has also been very willing to get a stablecoin bill passed. At a congressional hearing in September, Waters called for a "grand stablecoin deal" by the end of the year.

“I’ve made a public statement to you about bipartisanship — let’s see what you do with it,” Waters told McHenry at that hearing.

“So if she doesn’t get it done this year, she’ll probably go back to her old ways,” Hammond said. Waters did not respond to a request for comment from The Block, which asked what her priorities would be for cryptocurrency if she chaired the committee.

However, Hammond said Waters is against FIT21, so the path for that specific bill is unclear, but added that it depends on whether Waters believes digital assets need a regulatory framework.

The White House has expressed opposition to FIT21, but expressed in a statement in May that it is "eager to work with Congress to ensure a comprehensive and balanced regulatory framework for digital assets." Meanwhile, SEC Chairman Gary Gensler said cryptocurrencies do not need new rules and called on cryptocurrency entities to register and comply with its rules.

Hammond said the tax would also be enacted in 2025 as lawmakers face a deadline for Trump's Tax Cuts and Jobs Act to expire at the end of next year.

“When there’s a major tax bill on Capitol Hill, the whole tax thing is open,” Hammond said, adding that crypto tax proposals will be brought up during the discussion. For example, part of the discussion could include a bill introduced by Rep. Willie Nickel, D-N.C., and Rep. Drew Ferguson, R-Ga., that would clarify that staking rewards should only be taxed when they are sold.

Specific elections to watch

Hammond said Ohio's Senate race could be the most important. Another contentious race could be the Senate race in Montana, where Democratic Sen. Jon Tester will face Republican Tim Sheehy. Stand With Crypto gave Sheehy an A for his cryptocurrency-friendly stance, while Tester received a C.

Notably, Tester was one of a handful of Democrats who overturned an SEC announcement establishing certain accounting standards for companies that custody cryptocurrencies, including Senate Majority Leader Chuck Schumer, D-N.Y.

Overall, Hammond said that after speaking with candidates across the country, many seemed friendly toward cryptocurrency.

“The good news is that a lot of the races have pro-crypto Democrats and pro-crypto Republicans,” Hammond added. In Arizona’s Senate race, for example, Republican candidate Kari Lake and Democrat Ruben Gallego both received A ratings from Stand With Crypto. Fairshake provided Gallego’s campaign with millions of dollars, according to news reports.

POSA’s Mangiello elaborated that next year will be the “most pro-crypto Congress ever.” She said this will include people who consider themselves pro-crypto, but also means that future lawmakers may be more open-minded.

“I also think you’re going to get people who are at least a little more open-minded because they have to be educated on these topics in order to govern effectively,” she said.