Author: jiayi Jiayi
Recently, there's been a lot of anxiety on CT: Trump is going to lose the midterms, and crypto policy is doomed.
I was anxious too. Then I looked at the historical data of US midterm elections. Very counterintuitively—
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From 1946 to now, in 20 midterm elections, the President's party lost seats in 18 of them. A 90% rate.
On average, losing 28 House seats and 4 Senate seats per election. "Losing" is the norm. It's more like a law of gravity in American politics—voters are always correcting their choice from two years prior.
So the crypto circle is anxious that Trump will lose? This isn't anxiety, it's common sense.
There have only been three exceptions in history, each time relying on a sufficiently major external event to override voters' "correction instinct": Roosevelt in 1934 relied on the bottoming out of the Great Depression, Clinton in 1998 relied on the backlash from the Republican impeachment, and Bush Jr. in 2002 relied on the patriotic dividend post-9/11. All three were propped up by extreme external events. Normal governance? Voters simply don't buy it. Because voters don't want the President to have too much power, which is also why most midterm presidents don't win.
Without a Great Depression-level bottom, without the opponent self-destructing, without a national security-level moment of unity—the midterms almost certainly mean losing seats.
2026: Trump's Fundamentals
First, look at the current data:
Trump's approval rating is 41%, disapproval is 57%, net approval is -15.2%. Economic approval is even worse—31%, a career low.
The broader environment is less friendly. The Iran war is still ongoing. Tariffs are costing the average American family an extra $233 per month. Oil prices could break $120 at any time. This is the largest tax increase as a percentage of GDP since 1993.
The Republicans only have a 5-seat majority in the House. 5 seats. The Kalshi prediction market gives an 84% probability of Democrats taking the House.
But the Senate is another story. The 2026 election map is relatively favorable for the Republicans—Democrats have more seats to defend. So the mainstream prediction is: Democrats take the House, Republicans keep the Senate. A typical "divided government"格局 (landscape).
Historically, Wall Street's reaction to this result has actually been slightly positive. Divided government = no one can push extreme policies = high policy predictability. But for Trump's governance节奏 (rhythm/pace), this is a wall—legislation can't be pushed through, he can only rely on executive orders.
If the House is lost, does Trump have no cards left to play?
A divided government is indeed a wall, but not a dead end.
First, there are Executive Orders. This is Trump's most familiar and handy tool. Changing the SEC chair, shifting the CFTC's stance, Treasury guidance on stablecoins, the OCC's regulatory attitude towards bank custody of crypto—none of these require Congressional approval. Trump signed over 220 executive orders in his first term, and the pace would be even faster in a second term. Most of the regulatory loosening related to crypto can be completed via the executive path.
Second, agency appointment power. Presidential nomination, Senate confirmation. If Republicans keep the Senate, Trump's personnel布局 (layout/arrangements) at the SEC, CFTC, Fed, and Treasury would be mostly smooth sailing. Regulatory "looseness" or "tightness" often depends not on legislation, but on who is sitting in that chair.
Third, the reconciliation process. As long as Republicans control the Senate plus either chamber, budget-related bills can bypass the 60-vote threshold and pass with a simple majority. Crypto-related tax provisions (like how staking收益 (income) is taxed, digital asset reporting rules) could have a chance to go this route.
Fourth, the veto power. Even if the Democratic House passes an anti-crypto bill, the Senate can block it, and Trump can veto it; it likely won't reach implementation. Defensive cards can be played.
What truly can't be pushed through is structural legislation requiring a majority in both chambers—bills like the CLARITY Act (market structure bill), the full version of the stablecoin bill. Once such bills miss the window in the summer of 2026, executive orders can solve short-term problems, but cannot give the industry the true "legal certainty" it wants.
So losing the House in the midterms doesn't mean Trump's crypto policy stops, but the pace will retreat from the "legislative era" back to the "executive order era". Short-term positive effects will continue, but the long-term framework might have to wait until after 2028. What does this mean for crypto?
Two core bills are currently in process: the CLARITY Act (market structure bill) and the stablecoin bill. The Senate released a 278-page draft in January this year; it's currently stuck on stablecoin收益 (revenue)条款 (clauses) and DeFi regulatory definitions.
The legislative window is closing fast.
The Democratic strategy is clear—delay. Delay until after the midterms. If they take the House, rewriting条款 (clauses) or even直接 (directly) shelving them are both options. The most optimistic scenario is passing them before the summer of 2026. Missing this window could mean delay until 2027 or later.
The crypto industry itself knows this best. Fairshake (the industry's largest super PAC) now has $1.93 billion in cash on hand, backed by the likes of Coinbase, a16z, and Ripple. The entire industry has poured at least $2.88 billion into the midterm elections.
For one midterm election, the industry's bet is larger than the entire last presidential election cycle.
But money can't solve fundamentals. The deciding factors in midterm elections are the economy and sentiment; industry lobbying comes later. When voters cast their ballots, they think about gas prices and grocery bills, not stablecoin收益 (revenue)条款 (clauses). Stand With Crypto says there are nearly 300 pro-crypto lawmakers in Congress now—this number looks good, but it's a 2024 election dividend, and it might shrink in 2026.
Expectations and Disappointments with Trump
Let's talk about another point many are unwilling to face directly.
Regarding Trump in the crypto field, we have placed excessive expectations on him.
So at this stage, many people—even most people—feel it's not as expected, even somewhat disappointed. Bills are moving slowly, prices haven't outperformed expectations, policy implementation isn't as direct as imagined.
But don't forget one thing: Trump is by far, the most crypto-friendly president. He opened up a different world格局 (landscape/structure) for crypto.
From the shift in the SEC's attitude, to the approval of ETFs, to the stablecoin bill entering the agenda of Congress, to pro-crypto lawmakers being elected to Congress—these were unimaginable in 2022. The fact that we are now discussing "is the legislative window closing" is itself a huge进步 (progress/advancement). In 2022, there was no window to even discuss.
Disappointment comes because expectations were raised too high. But the格局 (landscape/structure) has truly changed.
Finally
The Republican Party losing the House in the midterm elections is a high probability event. The historical pattern is there; 90% of midterm ruling parties lose, unless extreme external events occur. Currently, there are none.
The real legislative window for crypto is before the summer of 2026. Missing this window, core bills might have to wait until after 2027. The industry's attention should be on the progress of legislation, not on predicting the outcome of the midterms.
The $2.88 billion in industry political spending is essentially buying time. Buying time to push through core bills as much as possible before the Democrats potentially take the House.
The crypto industry's current situation is a bit like Bush Jr.'s after 2002—the cards in hand look okay, but the time window is closing.
Expectations can be adjusted, the格局 (landscape/structure) will not go backwards. These are two different things.
