The U.S. midterm elections could shape the next phase of cryptocurrency regulation, according to reports, with all 435 House seats and 35 Senate seats up for election.
The results could affect the prospects of the CLARITY Act, a legislative priority for the cryptocurrency industry. While the bill could remain on the agenda if Republicans retain control of Congress, a Democratic takeover could lead to further negotiations and delays.
However, neither outcome guarantees the bill’s passage or failure. The legislation would need bipartisan support to reach the 60 votes required in the Senate.
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The election results could also influence whether Washington fills key vacancies at the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), restoring bipartisan leadership at two agencies responsible for implementing and enforcing U.S. digital asset regulations.
Despite statutory requirements for five-member commissions with bipartisan representation, the SEC currently has only two Republican commissioners, while the CFTC has just one Republican commissioner, according to a Forbes report.
“Unlike the SEC, the CFTC’s governing statute, the Commodity Exchange Act, does not define what minimum quorum is required for agency action, and therefore, the CFTC is able to undertake agency actions with a single commissioner,”
Last month, the SEC moved to change its procedures to allow policy and enforcement decisions with just one commissioner present, rather than the quorum previously required under its governing statute.
Following the failure of the CLARITY Act, cryptocurrency trade groups called on regulators to fill the legislative gap and take action.
Last month, House Financial Services Committee Chair French Hill praised SEC Chair Paul Atkins and CFTC Chair Michael Selig for advancing cryptocurrency rulemaking but emphasized the need for permanent legislative changes that only Congress can provide.
“In my judgement, these regulatory policies fall short of what we have to do, which is to have a legislative solution.”
Meanwhile, the Independent Community Bankers of America (ICBA), which represents community banks, filed a federal lawsuit against the Office of the Comptroller of the Currency (OCC) over its decision to grant trust charters to cryptocurrency firms.
“ICBA maintains the OCC has far exceeded its limited statutory authority to charter trust banks that perform fiduciary activities, vastly expanding the powers granted by Congress to create what the lawsuit refers to as a ‘gaping hole in financial regulation.’”
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According to Forbes, bipartisan nominations to the commissions are overdue and could help address concerns from third parties. However, delays in cryptocurrency market structure legislation have created regulatory uncertainty, affecting industry confidence and growth.
A Reuters report also highlighted the cryptocurrency industry’s growing political involvement, with the sector spending approximately $176 million across more than 100 congressional races during this election cycle.
