U.S. Crypto Policy May Stall After 2026 Midterms: Why Washington Gridlock Could Freeze Digital Asset Progress

Washington's crypto reckoning hits a political wall. The 2026 midterms loom—not as a catalyst, but as a potential tomb for meaningful digital asset legislation.

The Regulatory Standoff

Forget bipartisan breakthroughs. Post-election, expect legislative paralysis. A reshuffled Congress likely means renewed committee turf wars and procedural roadblocks. Agencies already pulling in opposite directions—SEC enforcement versus CFTC market-building—dig deeper trenches without Congressional direction.

Executive Action: The Only Game Left?

With Congress frozen, watch the White House. Executive orders and agency rulemaking become the primary tools. That means patchwork regulations—aggressive in some corners, permissive in others. Innovation migrates to friendlier jurisdictions while U.S. firms navigate a maze of conflicting guidance.

The Innovation Exodus Accelerates

Capital follows clarity. The prolonged uncertainty pushes developers, founders, and investment toward Asia and Europe. Digital dollar projects? Stalled. Clear custody rules? Dream on. The U.S. cedes ground daily—not with a bang, but with endless committee hearings.

Market Realities vs. Political Theater

Traders shrug. Markets priced in regulatory lag years ago. The real pain hits builders: startups burning cash on compliance theater instead of code, incumbents leveraging regulatory capture to squash competition. Same old finance playbook, just with blockchain buzzwords.

Bottom line: Policy stagnation becomes the default. The midterms don't resolve the crypto debate—they institutionalize the deadlock. Prepare for more headlines, fewer laws, and a regulatory environment moving at the speed of a congested Senate calendar. The only thing getting built here is another layer of bureaucratic friction.

In brief

• Ray Dalio warns of a possible political reversal in the 2026 US midterm elections.
• A Democratic victory could weaken or even reverse the Trump administration’s pro-crypto agenda.
• The crypto sector currently benefits from a favorable yet fragile legislative window until the end of the year.
• A political deadlock could plunge the crypto ecosystem into a new period of regulatory uncertainty.

Trump’s Pro-Crypto Agenda on Life Support

While the implementation of the Genius Act continues, RAY Dalio, founder of the hedge fund Bridgewater Associates, warned in an analysis : “financial accessibility will probably be the number one political issue next year”.

According to him, this dominant concern among American voters could flip the majority in the House of Representatives in 2026. He adds : “this will contribute to the Republicans losing the House and will lead to a very chaotic 2027, heading towards a particularly interesting 2028 presidential election”.

Dalio also insists on the narrow margin left to Donald TRUMP : “President Trump has a two-year unhindered mandate, which could be largely weakened in the midterms and completely reversed in 2028”.

This limited legislative window is all the more strategic as the crypto sector currently benefits from unprecedented political momentum. The Trump administration has initiated several reforms favorable to technological innovation, some directly targeting crypto regulation. Among these measures, several legislative initiatives supported by Republicans could reshape the American regulatory landscape, provided they are passed before 2027.

Among the projects currently backed by the Republican majority, we note :

• The CLARITY Act, which aims to clarify the legal status of cryptocurrencies and define a coherent market structure in the United States ;

• Strong support for emerging technologies, including blockchain and artificial intelligence, seen as pillars of American technological sovereignty ;

• A moderate approach to regulation, moving away from the hardline stance adopted by the SEC under the previous administration ;

• Promotion of pro-crypto political figures, such as Republican lawmakers favorable to financial innovation, to champion these bills.

However, this dynamic rests on a precarious institutional balance. Republicans hold a narrow five-seat majority in the House, making any electoral shift potentially decisive. If this majority is lost in 2026, much of this agenda could be suspended or even abandoned before being realized.

Towards Legislative Deadlock: The Democrats’ Waiting Strategy

Beyond Ray Dalio’s projections, it is the Democrats’ stance that confirms the vulnerability of the crypto agenda.

According to an analysis published by the investment bank TD Cowen, several Democratic lawmakers are seeking to delay the vote on the CLARITY Act until after the midterm elections, betting on a majority flip to slow down or rewrite the terms. This strategic waiting could thus postpone the adoption of this key legislation to 2027, jeopardizing the legal clarity of the crypto sector for the rest of Trump’s term. At this stage, no decisive vote has yet been organized, illustrating the opposition’s tactical caution.

On the prediction front, the on-chain data seems to align. According to Polymarket, a platform specializing in prediction markets, the chances that the Democrats will retake the House in November 2026 are estimated at 78 %.

This probability, if realized, WOULD immediately block many pro-crypto legislative initiatives, making any consensus between the two chambers of Congress impossible. As Joe Doll, legal advisor for the NFT marketplace Magic Eden, points out, “the majority in the House is extremely slim, and it almost always flips. We could then end up with a divided government, where everything is frozen for two years”.

The political timeline is accelerating. While institutional balances remain uncertain, the CLARITY Act will be debated in the US Senate this month! A crucial deadline for the crypto industry, which could mark a decisive turning point… or open a new period of regulatory waiting.

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