Gaming out crypto policy from now to the next presidency
Putting together the Clarity Act, the regulators, the 2026 election and the next Presidency — WAGMI
The hash:
Regulators pass the rules crypto needs to move forward, whether or not Congress passes a law.
Once that happens, it will catalyze capital formation with tokens, which should bring liquidity to the market.
Between legislators retiring and aggression by PACs like Fairshake, the path leads toward a more and more pro-crypto Congress, though probably only pro-crypto enough not to do anything negative.
But it’s harder to roll back regulations than people think.
Another full-throttle attack on the industry looks wildly unlikely.
Today’s post is complicated, but it should also put you at ease.
I got out my crystal ball and looked into the next four years of U.S. policymaking for the blockchain business. This is a realistic prognosis, based on how policy actually works.
Policymaking is slow and complicated. Complexity means there are a lot of ways for policy to fall apart, but complexity also means there are surprising ways for it to advance. Complexity also protects against changes once enacted.
Everyone who’s ever bought a hardware wallet is obsessing about whether or not the Clarity Act will pass. But regulatory clarity for the blockchain industry does not depend entirely on the Clarity Act passing. We can game out the twists and turns of policy over the next few years and see: The policy game is one for crypto to lose.
So far it’s doing fine. Let’s go.
Congress is a psy-op
The Clarity Act
The Senate
The Clarity Act passed the House on July 17, 2025, with 78 Democrats voting in favor. Since then, it has sat in the Senate’s Banking and Agriculture committees.
Senators have floated draft legislation of their own, but the consensus now appears to be that Clarity will be the vehicle for whatever bill comes out of the Senate. If a bill comes out of the Senate.
The most recent language for the Senate’s revised version came out January 12.
The White House has set a deadline to pass the bill by March 1.
Clarity passed out of the Senate Agriculture Committee on January 29, but it still needs to go through the Banking Committee as well. That’s always been the bigger lift.
Several deadlines have come and gone because the coalition of pro-crypto Senators has proven inadequate to get the bill through.
The Senators who prioritize crypto legislation are Sen. Cynthia Lummis (R.—Wyo.), Banking Chair Tim Scott (R.—S.C.), Sen. Tim Hagerty (R.—Tenn.) and Sen. Thom Tillis (R.—N.C.)
Of those, both Tillis and Lummis have announced that they are not running for re-election, which significantly diminishes their political clout.
Meanwhile, the pro-crypto Democrats are tepidly pro-crypto, and President Trump’s profiteering (via the TRUMP and MELANIA tokens, Trump Media’s bitcoin purchases and the son’s involvement in Bitcoin mining) have given them an easy excuse to reject crypto legislation.
All they have to do is demand an ethics clause. Trump is not going to greenlight an ethics clause.
It’s all giving clown car, frankly.
Friction: Last year, before we knew that Lummis was not going to return, the four didn’t have the clout to move the legislation when momentum was on their side, prices were moving up and the ICE thing hadn’t gotten out of control.
Friction: Coinbase playing chicken with everyone else over one provision on stablecoin yield.
Friction: Trump has quit talking about crypto much. He’s focused on other issues. That’s taken the heat off the topic.
Even the lieutenant he hired to steward his crypto priorities, Bo Hines, quit after only a few months on the job. There is a new guy, though.
The political math for Clarity just doesn’t add up. The lobbyists are going to keep saying they are making progress because that is what they have to say, but where does sufficient energy to move this thing come from?
With Bitcoin prices down so badly, to politicians, there is no urgency right now. Taking a controversial vote to move crypto now would feel like taking a political risk for a loser.
The Senate should have just passed the original version of Clarity rather than futzing with its own legislation, but hindsight is 20/20.
The House of Representatives
Let’s imagine that Clarity does pass the Senate. It still has to pass the House, again, because the bill will have changed.
Both chambers have to pass the exact same bill in order for it to go to the President.
The clock is ticking.
Primary elections for House members begin in March. That’s the low-level beginning of election season for House members (everyone is up for re-election, technically, though many face no challengers).
In September, real election season kicks off. The closer it gets to election day, the harder it will be to get a vote together. Plus, members in tight races will be less open to casting a potentially controversial vote.
Democrats are facing a left-wing surge in primaries, with challenges to incumbents. These challengers are sure to use anything crypto-related against their opponent.
Whether that issue moves voters will depend on the district, but politicians are nervous Nellies. They will want to give challengers as little ammunition as possible.
Rep. French Hill (R.—Ark.) is highly motivated to get the legislation through and he has proven to be an effective legislator. Maybe he can make it happen if the Senate doesn’t send him something with too many dealbreakers.
But he doesn’t have much time.
Think about it, though — First the Senate was going to finish Clarity by the August recess. Then by the end of the year. Then by the Jan. 15 Senate Banking mark-up. It flubbed all these deadlines. March 1 is a week away.
September might seem like a long time, but it’s very soon in legislative time.
Moreover, September will be closing time for the next budget fight. Remember how that went last year? The current budget runs through the end of September.
In reality, it would be better to get this done before budget fights begin.
Prognosis: My take is that Clarity is not going to pass this year. I put its odds at 30%. I think people on Polymarket have been hitting hopium hard.
The 120th Congress
2026 is an election year for the whole House and about a third of the Senate.
In January, a new Congress will be seated. Right now, it looks likely to be a split Congress.
The wild card is the Senate: 35 seats are up for election, 22 Republicans and 13 Democrats. Democrats would have to pick up 4 to gain the majority.
The wisdom among political reporters for a long time has been that this will be a bad year for Senate Republicans.
However, the wisdom among political reporters was also that Kamala Harris would be President.
Five Republicans aren’t returning. Four Democrats aren’t. So those are open seats in this race.
Both Democrats and Republicans are viewed unfavorably by most Americans, though Democrats are slightly more disliked, in general.
The point: It’s going to be close either way. The reasonable bet is a divided Congress. That likely means a GOP Senate and a Democratic House.
Under that scenario, it’s very unlikely that anti-crypto legislation passes.
What if the Ds take both chambers? It’s still unlikely that anti-crypto legislation moves.
First of all, Fairshake PAC will have once again deployed tens of millions of dollars. If their results are anything like 2024’s, members will once again be shaken by the effectiveness of those dollars.
Second, a number of Democrats have said they are in favor of using blockchain technology to grow the economy. They aren’t going to completely abandon that idea and ban token trading now.
Take, for example, the race of Rep. Al Green vs. Rep. Christian Menefee in Texas’ 18th House District. Menefee is signaling that he’s open to digital assets. He also looks likely to win.
If more pro-crypto Dems come in, it’s even harder to imagine anti-crypto legislation moving through Congress.
Even Rep. Maxine Waters (D.—Calif.) might be targeted.
Realistic outcome of a Democrat-led 120th Congress: Crypto gets no hearing at all. Second possibility, it moves much more restrictive legislation, something more in line with the “pro-crypto” Democrats’ principles.
Not ideal, but workable.
But if anti-crypto legislation did pass the next Congress, Trump will veto it. If there’s one bet I would drop $3,333 on right now it is this: The next Congress will not be heavily enough Democratic to override a veto on a crypto bill.
There is no way.
Crypto voters deeply believe they need a failsafe guarantee that the regulators will not be able to turn against crypto again.
It’s a psy-op. Biden and Gensler were the two-headed final Boomer boss. The chains survived.
Rejoice. Regulators will not turn against crypto again.
Keep dreaming of Lambos, but plan for Nissans and hope for Teslas. Either way, the politicians aren’t going to leave you walking.
Trust the process
Regulators don’t have to make the political calculations legislators do. They are appointees, not elected. They have the authority they need now. They can just go.
And regulation is stickier than policy n00bs give it credit for.
Project Crypto is underway in both the CFTC and the SEC.
The next deliverable to look forward to from those agencies is the Memorandum of Understanding on how they will divide up regulation of this market.
This comes from two highly aligned policymakers. One, at the end of his career, SEC Chair Paul Atkins. The other, at the beginning of the career, CFTC Chair Michael Selig.
Note that Selig used to work under Atkins at the SEC, just a few months ago. I’d bet my hat that Atkins orchestrated Selig’s appointment (over Brian Quintenz), because he wanted to guarantee harmonization between the agencies.
Which means Selig has every incentive to let Atkins take the lead on policy, because the older man has set the younger one up for a great career (he’s leading a major regulator at 37 — 14 years younger than Gary Gensler was when he got that job).
After that, look for the SEC to roll out its innovation exemption.
By the way: The SEC just replaced Selig with an attorney who last worked at Chainlink, crypto’s leading oracle provider.
Read between the lines.
By fall, look for draft regulations from Project Crypto to come out from both agencies. There’s likely to be a long comment period following that, substantial rewrites, with a final rule promulgated six months or so later.
Prognosis: I’d give it 77% that complete rules around the issuance and trading of tokens will be promulgated by these agencies by early 2027.
These rules will cover how exchanges can be registered, how exchanges can list both commodity and security tokens, how money can be raised with token sales and how a token can graduate from security to commodity.
Just that clarity around capital formation alone seems like it will be a big catalyst for liquidity in the market again. Some of us remember 2017. It was stupid but fun.
Not for nothing: Stablecoin rules will be effective by then, too. That business still looks very good.
Get this through your head: Everything the blockchain industry really needs to grow from here can be and probably will be in those rules. If it’s anything close to “enough” it should be a catalyst for the market to pick back up.
All legislation is really needed for is ensuring that there won’t be another Gary Gensler.
But, here’s the thing:
There won’t be another Gary Gensler
I suppose that if crypto goes on a crazy run that gets deep into Main Street only to self-immolate even worse than Terra/3AC/FTX and that kicks off another recession? OK. Maybe another Gensler in that case.
I put the chances of that at about 3% though.
Crypto is still pretty small. It’s just not going to get that big that soon.
➡️ Here’s a realistic scenario: No law. Regs go live in mid-2027. That’s a full 18 months live before there’s a new President. Economy gets accustomed to those rules. Regs stick.
If a Republican wins
Then the rules will just carry on. Four more years.
If a Democrat wins?
It’s not going to be Elizabeth Warren, okay?
Odds are, the rules will carry on just the same. A Democrat will be unlikely to do more than modify them. There’s a decent chance, however, that the conversation has just moved on.
By 2028, Bitcoin will be pushing two decades of life. ETFs will have been running for four years.
Hundreds of millions of dollars will have been raised in orderly, regulated ways under whatever rules Atkins and Selig put in play.
Fairshake will also have had a whole other cycle to get some more pro-crypto Democrats and Republicans elected.
Time is on the blockchain world’s side here. The anti-crypto side is strongly correlated with age.
Even if an anti-crypto Democrat wins: They can’t just unwrite the regs with the stroke of a pen. That’s not how rulemaking works.
To kill the Atkins-Selig rules, the new administration will need to pass a new rule. This is likely to take at least a year.
In other words, the rule likely has something like two or three years to entrench itself in the economy before Democrats can get a crack at rolling it back.
But it just doesn’t seem likely that the next Democratic president will be knee-jerk anti-crypto. If anything, they might want to be seen neatening up the edges of the industry, but they won’t try to kill it. Those days are over.
If a Democratic president has Congress under his party, they are likely to pass an ethics law, like the one Trump has resisted. That would be meaningless for the industry, however.
Democrats might also want to ramp up anti-money laundering and know your customer rules. This could hurt, but it wouldn’t be fatal.
Prognosis I: I put the odds of another Gensler at 11%.
There are many, many single issue crypto voters. There are zero single issue anti-crypto voters.
What is the political advantage of going hard against blockchains at this point, especially as more and more people have jobs in the crypto world?
Prognosis II: If Atkins and Selig write reasonable rules, eventually Congress will codify them. That happened with the Shadd-Johnson Accord (another CFTC-SEC team-up) in the 70s. It could happen again. I put codification of SEC-CFTC rulemaking at 66% within six years.
Digital assets have policy firewalls
It has Trump’s veto pen through 2028.
A divided Congress won’t pass anything but budget and defense legislation.
A Democratic Congress will still have members that owe Fairshake.
The regulatory agencies will roll out sensible crypto legislation, which has at least two years before a real chance of a rollback.
Even then, those rules won’t be rolled back, but it might be modified.
The wildcard: Another giant scandal.
Even if MicroStrategy goes into a death spiral, though, I don’t think that would do it.
No more hard coding stablecoin prices, though, folks!
At the 50,000 foot view, there are those that believe that crypto was never anything but an emergent phenomenon of ZIRP’s excess liquidity. I don’t buy that, but, well, if that’s true then none of the politics matter and nothing was going to save Bitcoin anyway.
If it’s not true, though, then as a great philosopher once said: “It’s time for you to stop all of your sobbing.”
For years it has been gospel in this industry that all it needs to get through to the mainstream of American investing is regulatory clarity. We are on the precipice of exactly that.
And you’re selling?