Written by: David Christopher
Compiled by: Saoirse, Foresight News
What level of risk does this midterm election truly conceal for the encryption industry? As the possibility of a Democratic sweep of both the Senate and the House of Representatives in the midterm elections continues to rise, I aim to conduct an in-depth analysis of its potential impact on the future trajectory of the encryption industry, based on current polls.
To this end, I have consulted prediction markets on one hand, and resources like Stand with Crypto (SWC) on the other—a platform that records the policy stances of various candidates towards the encryption industry. I have integrated this information and built an analytical dashboard accordingly.
Although the data is still being supplemented and refined, I have established a core database tracking key districts where Democratic candidates are leading, and correlating their encryption policy positions with potential influence in Congressional committees. This analysis preliminarily reveals the policy landscape for the coming months: superficially, there appears to be room for cooperation, but a deeper look uncovers profound structural issues.
A Surprising Reality
First, it must be clarified that Democratic support for the encryption industry is actually higher than commonly perceived—at least on certain bills.
In the House of Representatives, 101 Democratic lawmakers (approximately 48% of the caucus) voted in favor of the GENIUS Act; in the Senate, 18 Democrats (40%) voted to advance the bill to a floor vote. This seems to form a tangible bipartisan support coalition. However, this support is confined to that specific bill. Once it enters the core stage that truly determines legislative direction—the committee process—this support vanishes entirely.
This is precisely the crux of the issue.
The Core Source of Influence
Encryption-related legislation is never brought directly to a full floor vote.
Whether it's stablecoin regulation, market structure rules, or defining the authority of the U.S. Securities and Exchange Commission (SEC), all issues must first undergo committee review. The House Financial Services Committee (HFSC) and the Senate Banking Committee are the two core bodies that determine the life or death of encryption bills (market structure bills also require input from the Agriculture Committee regarding the relevant authority of the Commodity Futures Trading Commission (CFTC)).
Committee chairs hold absolute agenda control: they decide which bills get hearings, which move to the deliberation stage, and which die quietly in procedural deadlock. A chair opposed to a bill does not need to vote it down; they can simply kill it by refusing to schedule it.
Republican chairs in recent years have fully demonstrated the influence of this power:
- Senate Banking Committee Chair Tim Scott pushed the GENIUS Act through committee review and helped it pass the Senate vote;
- Former House Financial Services Committee Chair Patrick McHenry strongly advocated for the FIT21 Act, making it the first major encryption market structure bill to pass the House;
- Current House Financial Services Committee Chair French Hill has continued this momentum, pushing related bills like the CLARITY Act through the House (although this bill remains stalled in the Senate), and consistently holding hearings on digital assets and capital markets modernization.
So, what changes if Democrats achieve a full victory?
The majority party will control all committee chair positions in Congress, without exception. If Democrats recapture the House, they will chair all House committees; if they take the Senate, they will fully control all Senate committees. The selection of chairs within the majority party is typically based on seniority.
- House Financial Services Committee: The most senior Democrat is Maxine Waters;
- Senate Banking Committee: The highest-ranking Democrat is Elizabeth Warren.
It is well-known that both have voted against all major encryption bills. Warren led the opposition during the GENIUS Act deliberations, calling it "a threat to national security"; Waters directly condemned the bill as "a complete and total crypto scam."
The key point of contention in the House is this—once party control changes, the subcommittees will be completely reorganized. The majority party will dictate the allocation and proportional adjustment of seats for new members. Waters will have significant influence over personnel arrangements within the House Financial Services Committee and its subcommittees, including deciding who will oversee "digital asset" related matters. Admittedly, she cannot unilaterally decide all members (the party leadership and caucus have a say), but it is enough to steer the committee towards her preferred anti-encryption stance.
The Democratic contingent in the current House Financial Services Committee is already clearly leaning anti-encryption: Brad Sherman, Stephen Lynch, Emanuel Cleaver, and Sylvia Garcia all hold strong opposing views. Even with pro-encryption members like Jim Himes, Bill Foster, Ritchie Torres, Josh Gottheimer, and Vicente Gonzalez, they cannot control the agenda under Waters' chairmanship.
This chart shows the distribution of encryption stances in the two core committees if Democrats regain control of Congress in the 2026 midterm elections, visually reflecting the regulatory landscape the encryption industry will face.
The situation in the Senate Banking Committee is slightly better. Although Warren would become chair, the committee's composition is more diverse: it includes pro-encryption senators (e.g., Mark Warner, Ruben Gallego, Angela Alsobrooks), opponents (e.g., Tina Smith), and swing-vote moderates. A slight positive is that if Democrats control the Senate, Senator Gallego, rated favorably on the SWC platform, is highly likely to chair the digital assets subcommittee. Although Warren would still control the full committee's agenda, Gallego could potentially carve out some space for pro-encryption voices at the subcommittee level.
The Key Elections That Truly Impact the Landscape
Most existing pro-encryption Democratic lawmakers are not on the House Financial Services Committee or the Senate Banking Committee. They can certainly vote in favor of relevant bills in full floor votes, and they can pressure party leadership (though, given the high degree of partisanship on this issue, most are reluctant to speak out for the encryption industry), but they cannot force committee chairs to advance legislation.
Only a handful of elections can truly change the power composition within these committees.
This chart is an analysis of key district races affecting U.S. Congressional encryption legislative power. Data is averaged from Polymarket and Kalshi prediction markets. It corely shows which election results would directly change the encryption stance of the House Financial Services Committee (HFSC) and the Senate Banking Committee.
The Final Conclusion of the Midterm Elections
The prospects in the House are extremely grim.
The probability of Democrats retaking the House is as high as 85%, meaning Waters is highly likely to chair the House Financial Services Committee, wielding absolute power to reorganize subcommittees and control the legislative agenda. The remaining bright spots are extremely limited: Menefee has a chance to defeat Green for a seat, and Gonzalez is highly likely to retain his current seat. These scenarios might create some checks and balances, but they cannot change the core of power—the ownership of the chairmanship.
The Senate is the encryption industry's last remaining stronghold, and the situation worsened last night: Juliana Stratton defeated Raja Krishnamoorthi in the Illinois primary. Based on SWC platform records, combined with the fact that Fairshake (a U.S. Super PAC with ties to the encryption industry, and currently one of the most influential political lobbying organizations in the crypto space) spent $7 million opposing her, it is clear that Stratton is a staunch anti-encryption politician.
Even more frustrating is the overall picture: approximately 47% of Democratic lawmakers in both chambers supported the GENIUS Act, and 37% of House Democrats supported the CLARITY Act—pro-encryption Democrats do exist. But the life or death of bills is never decided by full floor votes; it depends on the committees. Committee votes on market structure bills strictly follow party lines. The existing support base simply cannot transmit to the core环节 that truly determines legislative direction.
The encryption industry should not have become so partisan. Pro-encryption Democrats do exist; they just happen not to be in the key positions that hold real legislative power.
