Bloomberg: Blue Wave Shock Spreads to Crypto Industry, Fueling Fears of Tougher Regulation

Democrats' sweep of both chambers of Congress in the Nov. 3 U.S. midterm elections could leave the cryptocurrency industry facing tougher regulation, Bloomberg reported.

Bloomberg said on Nov. 7 that concern is mounting across the crypto industry that Democratic control of Congress could wipe out the political advantages the sector had enjoyed under President Donald Trump's pro-crypto policies, while opening the door to tighter rules and congressional investigations.

One possibility is that Congress could begin a full-scale investigation into the Trump family's crypto businesses. Trump has long maintained that there is no conflict of interest between his business interests and his duties as president. But with Democrats now holding congressional investigative power, potential conflicts between the Trump family's crypto ventures and government policy could emerge as a major target.

Democrats who have taken a comparatively tough line on digital assets also stand to gain influence in Congress. Representative Maxine Waters is poised to play a central role on the House Financial Services Committee, while Senator Elizabeth Warren is set to wield significant influence on the Senate Banking Committee.

Legislation on the CLARITY Act, one of the crypto industry's top priorities this year, also faces setbacks. The bill failed to pass the Senate in September and remains pending in Congress. Democrats are likely to seek conflict-of-interest provisions, stronger investor protections and expanded Securities and Exchange Commission oversight as discussions over the measure continue.

"The industry will likely take a defensive posture, at least initially, as it adjusts to the new congressional leadership," Adam Minehardt, chief policy officer at the Hyperliquid Policy Center, said.

Still, some argue that Democratic control of Congress will not necessarily be a negative for the crypto industry. "Digital assets have always been a bipartisan issue," Ji Kim, chief executive officer of the Crypto Council for Innovation, said. He added that the group is prepared to work across party lines with both newly elected and incumbent lawmakers.