U.S. Midterm Elections Just 30 Days Away: Cryptocurrency Industry Faces Dilemma

Coin Circle (120bTc.coM): The U.S. midterm elections have entered the final 30-day sprint. The voting results on November 3, Beijing time, will not only determine the political landscape of both the House and Senate but will also significantly influence the policy direction of the cryptocurrency industry for the next two years. Recent data from polling platform 270towin and prediction markets like Kalshi and Polymarket indicate that the probability of the Democratic Party regaining control of the House of Representatives is rising, while the Senate races are also showing a high level of competitiveness.

After the "Clarity for Digital Assets Act" (CLARITY Act) faced legislative hurdles last month, the cryptocurrency industry is closely monitoring federal regulatory developments. Congress plays a central role in this political game. The power structure of the next Congress will not only control the budget approval for key agencies such as the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Office of the Comptroller of the Currency (OCC), and the Department of the Treasury but will also directly determine the intensity and policy bias of these agencies' regulation of the cryptocurrency industry.

Cryptocurrency Tax Law on the Substantive Agenda

Patrick McHenry, a senior member of the House Financial Services Committee, pointed out that even if the election results do not meet Republican expectations, there is still a possibility of using the "lame-duck session" legislative window to force the CLARITY Act through, clarifying the interaction boundaries between regulatory agencies and the cryptocurrency industry.

In contrast, tax reform has been identified as a policy intersection for both parties. The draft "Cryptocurrency Tax Act" received bipartisan support and was smoothly passed by the House Ways and Means Committee last month, and Senator Steve Daines has also submitted a corresponding version of the bill to the Senate. This means that regardless of which party leads Congress after this midterm election, the compliance framework for cryptocurrency taxation will inevitably enter a substantive legislative phase by 2027.

Political Donations Reach a Peak

In terms of political capital operations, the cryptocurrency industry's funding input for this election has begun to show signs of fatigue. The Super Political Action Committee (Super PAC) Fairshake, funded by several leading cryptocurrency companies, and the Digital Freedom Fund, supported by Gemini co-founders, previously pledged to invest $30 million and $3 million respectively to intervene in key districts. However, as voting day approaches and media advertising prices soar, Fairshake has clearly stated that there are no plans for additional budget allocations, indicating that political investments from the industry may have reached a ceiling.

If the Democratic Party successfully flips the House, some cryptocurrency entities that were deeply tied to specific political factions in the early stages may face severe political backlash. These companies are likely to become targets of hearings, and even if substantial legal sanctions are not triggered, frequent compliance reviews and political pressure itself constitute significant operational risks for businesses.

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