Democrats' Midterm Sweep Threatens Crypto's Winning Run in Washington
Democrats are set to take control of the US Congress after sweeping the 3 November midterm elections, a result that could end the favourable run the crypto industry has enjoyed in Washington under President Donald Trump, Bloomberg reported on 7 November. The industry now faces the prospect of tougher rules and closer scrutiny of its ties to the president.
The shift comes weeks after the industry's biggest legislative push stalled. On 15 September the Clarity Act, which would have set federal rules for crypto markets and divided oversight between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), lost a procedural vote in the Senate 49-50, well short of the 60 votes it needed. The House had passed the bill 294-134 in July 2025. Senate talks broke down over ethics limits, with Democrats seeking stricter enforcement to stop federal officials and their families profiting from crypto. Banks, meanwhile, feared that yield-like stablecoin products would drain deposits.
Democrats have signalled that they will seek tougher ethics restrictions, stronger consumer protections and a larger role for the SEC. Senator Elizabeth Warren is expected to lead the Senate Banking Committee, and Representative Maxine Waters is positioned to gain influence on the House Financial Services Committee. In Ohio, Sherrod Brown, who lost his Senate seat in 2024 after crypto lobby groups spent millions against him, unseated Republican Senator Jon Husted. Research firm Capstone says Brown could take a top role on the Senate Agriculture Committee, which oversees the CFTC.
Lawmakers have already sought information about ventures involving the president and his family. Trump has consistently denied that his business interests conflict with his duties. Adam Minehardt, chief policy officer at the Hyperliquid Policy Center, told Bloomberg he expects the industry to be on the defensive as it adjusts to new committee leaders with a real oversight agenda.
Not all of the industry's gains can be easily undone. Repealing the federal stablecoin law passed in 2025 would take new legislation, and regulators are still writing their own rules. The SEC proposed its Regulation Crypto Assets in August, and in September the CFTC sent its crypto market rules for White House review. Even so, Tyler Gellasch, chief executive of the Healthy Markets Association, said Congress can influence regulators through funding and investigations. Ji Kim, chief executive of the Crypto Council for Innovation, said digital assets have always been a bipartisan issue and that the industry will work with both parties.
The political change also arrives at a difficult moment for the market. Bitcoin remains well below its previous highs, and the industry is still dealing with a $6.3 billion hack at Binance. Bloomberg reported that the exchange has effectively replaced the stolen crypto using its corporate treasury and two insurance funds.
What it means for Pakistan: Nothing in Washington changes Pakistan's own rules, which are set under the Virtual Assets Act 2026 and enforced by the Pakistan Virtual Assets Regulatory Authority (PVARA). There are still two links to watch. In January, Pakistan signed a memorandum of understanding with a firm linked to World Liberty Financial, the venture tied to the Trump family, to explore a dollar-backed stablecoin for cross-border payments. Closer congressional scrutiny of the family's ventures could therefore touch a partner Pakistan has engaged, although the reports reviewed for this story do not say the Pakistani deal is a target. Binance, meanwhile, received a No Objection Certificate from PVARA in December 2025. Under PVARA's published process, that certificate is a step towards a full licence rather than a licence in itself, so Pakistani users can check a platform's status with the regulator directly.
