There was a lot on the line with this midterm election. A Democrat-controlled Congress could mean certain legislation that hinged on Republican support may not pass during the second half of President Trump’s term. Crypto investors and lobbyists, including the PAC (political action committee) Fairshake, were watching the results closely — and spending money on campaign advertisements to elect pro-crypto candidates.
The crypto industry spent roughly $200 million on candidates most likely to back pro-crypto legislation, according to a Reuters article. Fairshake backed 19 Republicans and 13 Democrats for the U.S. House of Representatives. They won several notable races, including Nebraska Senator Pete Ricketts (R), but lost others, including the Ohio race, where crypto skeptic Sherrod Brown (D) took a Senatorial seat.
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One notable act that previously failed in the Senate due to lack of Democratic support was the Clarity Act, legislation designed to establish a “clear regulatory framework for digital assets,” according to a press release from the U.S. Senate Committee on Banking, Housing and Urban Affairs.
One provision of the act is to re-classify some digital assets as commodities, which would put them under looser regulations, with less oversight from the Securities and Exchange Commission (SEC) and protection for investors.
The Clarity Act is unlikely to pass with a Democratic Congress and crypto investments may fall under even more scrutiny. Find out below how this could affect your investments.
Bitcoin Exiting a Bear Market
When it comes to crypto investments, bitcoin stands alone with a long-standing security track record, a fixed supply and more stability than altcoins. The original cryptocurrency has been slowly exiting a bear market this fall, rising by roughly 30% since August, according to Yahoo Finance.
It dipped slightly on Wednesday after Election Day, but jumped over $80,000 by that evening. On Thursday, Nov. 5, it fell to below early Wednesday’s lows. But these are normal, day-to-day swings prompted by market conditions.
Crypto expert CK Zheng, partner and CIO at ZX Squared, noted that it’s important to take a longer-term view.
“An anti-crypto environment might create near-term volatility and friction, but I still think that even in this case, it is unlikely to stop the structural shift toward bitcoin as a store-of-value,” he said.
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Referring to bitcoin as “digital gold,” he said the core investment thesis applies regardless of whether Congress is pro- or anti-crypto. “Bitcoin can be an effective hedge against the inevitable debasement of the U.S. dollar," he added.
The Genius Act Still Gives Stablecoins a Boost
The Genius Act, which establishes rules for issuing and distributing stablecoins backed by the U.S. dollar 1:1, will go into effect in January 2027. It won’t be easy to overturn since the legislation is already in place.
The president would likely veto any anti-crypto laws and the Democrats don’t have the two-thirds vote in both chambers required to override a veto.
Slowed, Not Halted
Zheng said that a pro-crypto Congress could have accelerated timelines for clear and predictable regulations. “Both of these things would lower the barrier to entry for retail and institutional investors if they [had] become reality,” he said.
But the crypto train is out of the station. While an anti-crypto Congress can seek to regulate crypto more heavily, the momentum behind bitcoin’s adoption as a store-of-value is harder to stop.
“Things like fiscal policy, structural debt and monetary liquidity are the primary drivers for bitcoin adoption and these are long-term trends that transcend specific midterm election outcomes,” Zheng said.
Federal reserve interest rates, SEC regulations and even the general state of the economy can also affect crypto prices moving into 2027. As with stocks, it’s important to take a long-term view of bitcoin and altcoins and never invest more than you are willing to lose.
Editor’s note on political coverage: MoneyLion is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories.
Investing involves risk, including the possible loss of principal. Always consider your individual circumstances and consult with a qualified financial advisor before making investment decisions.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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