Crypto’s New Washington: What the Midterms Changed

The Spaces convened policy veterans and industry advocates to assess what Democrats winning control of both chambers means for crypto in Washington. Speakers agreed the moment is a chance for a reset: move from partisan posturing to policy-first engagement that emphasizes affordability, inclusion, faster/cheaper payments, privacy rights, and real consumer benefits. Cody Carbone argued for returning to basics and educating a wave of new members, while Jen Brown highlighted Chair Maxine Waters’ olive branch—pairing anti-corruption priorities with “tough but fair” rules. Chris Giancarlo framed the shift as a pendulum swing and urged regulators and industry to build relationships with new oversight leaders. Justin Slaughter and Sheila Warren stressed that ethics and accountability are now non-negotiable entry tickets, and that outreach must expand beyond Congress to the Democratic policy ecosystem and skeptical nonprofits. Near-term wins will likely be narrow—tax fixes, targeted market structure and stablecoin elements—amid heightened oversight; broader legislation may wait until ethics conditions and political dynamics evolve. The clear throughline: humble, bipartisan, and consistent engagement—with users’ voices and credible messengers front and center—offers the best path forward.

Post‑election debrief: What the midterms mean for U.S. crypto policy and strategy

Participants and roles

• Host: Ellie (Crypto in America) — co-hosted with Jacqueline Melanic and Gerald (Jerry) Gallagher
• Cody Carbone — CEO, Digital Chamber (trade association)
• Jen Brown — Vice President, BGR Group; former Banking Counsel to Senate Democratic Leader Chuck Schumer
• J. Christopher Giancarlo — former CFTC Chairman, “Crypto Dad”
• Justin Slaughter — Policy Director, Paradigm; former senior policy official at both the SEC and CFTC
• Sheila Warren — former CEO, Crypto Council for Innovation (CCI); now at Project Liberty

Big picture: Election outcome and the pendulum swing

• Democrats won control of both chambers. Speakers repeatedly framed this as a significant rebalancing of power in Washington with direct implications for crypto policy, oversight, and agenda-setting over the next two years.
• Chris Giancarlo’s “pendulum” analogy: policy swung hard one way in the prior period; this election is the snap-back. The Democratic coalition ran on bread-and-butter issues like affordability, not crypto per se, which opens a policy bridge for crypto if framed around lowering costs and financial access.
• Near-term political reality:
  • Increased oversight intensity is expected (hearings, investigations) across technology and finance, with crypto included but not uniquely targeted compared to other sectors.
  • No political victories are permanent; the industry must adapt to new power dynamics and rebuild bipartisan credibility.

Committee and leadership landscape: What changes and why it matters

• House Financial Services Committee (HFSC): Cody noted major turnover—roughly half the Republicans lost/retired—creating a cohort with limited priors on digital assets and thus a fresh education opportunity.
• Maxine Waters (expected to pursue the gavel again) has issued an agenda letter with two salient pillars:
  1. Legislation to address “Trump’s crypto corruption” (Democratic unifier across House and Senate). 2) “Tough but fair rules of the road” for legitimate crypto businesses—framed as an olive branch to encourage constructive engagement.
• Senate Banking and Agriculture oversight dynamics:
  • Elizabeth Warren is widely expected to chair Banking; she will be a formidable oversight presence on crypto/finance.
  • Sherrod Brown could potentially chair Agriculture (CFTC jurisdiction), but it’s not automatic. As Jen explained, Brown lost seniority; he must request and the caucus must approve an exception. Otherwise, Michael Bennet is the presumptive chair. This decision materially affects CFTC oversight tone and priorities.
• Agency leadership:
  • Chris referenced Chairs “Selig” and “Atkins” at the SEC/CFTC (industry-friendly on innovation) but emphasized that new Democratic oversight—Warren, Brown/Bennet—will pressure-test agency agendas, funding, and investigations. Building personal relationships with new leadership is critical to avoid antagonistic standoffs and to find workable common ground.

Strategic reset: How crypto should engage the new Democratic majorities

• Cody Carbone’s reset thesis:
  • The last reset opportunity (start of 2025) was missed; the industry aligned quickly with the administration and failed to reestablish trust with Democrats after the Biden/Gensler era. This time, the industry must reset intentionally—lean into DC, map every new Democratic office, and tailor education to their core priorities.
  • Expect limited odds for comprehensive legislation; focus on narrower, less divisive components (e.g., pieces from the Clarity Act) and build stepwise wins.
• Messaging recalibration (multiple speakers):
  • Lead with Democratic policy priorities: affordability, inclusivity, access; cheaper, faster payments; remittance cost reduction; secure savings and yield; financial privacy and civil liberties.
  • Make the public-interest case from first principles and avoid performative politics. “Only Democrats can talk to Democrats” (Justin) — empower credible Democratic messengers to re-open doors.
• Relationship and process discipline (Jen, Sheila, Chris, Justin):
  • Show up consistently; be humble and patient; treat Hill staff as partners with packed agendas and limited tech exposure. Demonstrate products, don’t lecture. Recognize many staffers were restricted from using crypto and may be learning de novo.
  • Build outside the Hill as well. Engage nonprofits, think tanks, and policy networks that influence Democratic discourse; this layer has been under-addressed by the industry.
  • Constituents and users matter. Normal, satisfied users are the industry’s strongest validators to counter a “victims-only” narrative.

The ethics and accountability imperative

• Core message from Jen, Sheila, Chris, Justin: the ethics question cannot be sidestepped. It is a barrier to entry for serious legislative work.
  • During Clarity Act talks, Democrats repeatedly asked industry to address ethics; many industry advocates refused, focusing only on technical substance. That approach is unsustainable now.
  • Oversight leaders (e.g., Reps. Jamie Raskin and Jesús “Chuy” Garcia) and Senators (e.g., Richard Blumenthal) will scrutinize corruption and accountability broadly across sectors, not only crypto. Tether/Binance and any ties to sanctioned jurisdictions (North Korea, Iran, Russia) will draw bipartisan attention.
  • The Groundwork Collaborative’s 181-page memo signals a cross-industry corruption lens, not a crypto-only campaign.
• Republican-side reckoning (Chris): Support the administration’s legitimate policy advances on innovation while acknowledging “self-dealing” missteps (e.g., launching Trump/Melania coins on Inauguration Day). Without candid acknowledgement, productive engagement with Democrats will stall; with it, the industry risks White House ire. This is the hard but necessary balance.
• Political spending has consequences: Massive anti-Sherrod Brown spending (> $100M over 2024, ~$60M in one race cycle) will color receptions. Sheila cautioned: “If you come at the king, you best not miss.” An “apology arc,” not a “revenge arc,” will be necessary to repair relationships.

Legislative paths: What’s plausible in the next Congress

• Low odds for a sweeping “Clarity 3.0” package; focus on doables:
  • Targeted market structure elements (building on prior Stabenow spot market draft; selected Clarity Act components like Title I/ancillary assets where feasible).
  • Stablecoin rules emphasizing consumer protection, payment efficiency, and systemic safeguards.
  • Tax modernization: The Ways & Means Committee already advanced a crypto tax bill in the past Congress. With a looming debt ceiling fight, revenue needs could catalyze tax code fixes that also reduce friction for everyday users. Names flagged: Rep. Steven Horsford, the successor to Rep. Miller on the House side; in the Senate, Chair Ron Wyden and Senator Moreno on the Democratic side were mentioned as potential leads.
• House Financial Services dynamics: Chairwoman Waters and Ranking Member French Hill could collaborate on a “tough but fair” framework for legitimate crypto businesses.
• Bipartisanship is non-negotiable: None of this is likely via reconciliation; real laws will require “strange bedfellows” from both parties, compromise from the outset, and a posture of “I want to make a law,” not “I want to win a fight.”

Regulatory outlook: SEC/CFTC agendas under oversight

• Expect a high volume of hearings and information requests. While agency heads are innovation-friendly per Chris, they must adapt to new oversight priorities.
• Practical playbook (Chris):
  • Proactively engage: agency chairs should leave headquarters, meet new committee leaders (Warren, Brown/Bennet), visit states, solve constituent problems, and find small areas of cooperation to build trust.
  • A little common ground goes a long way in defusing default antagonism and preserving room for technical rulemaking progress.

Political realism: Partisanship today and how to defuse it

• Current reality (Sheila): Crypto is perceived as one of the most partisan industries in Washington. It doesn’t have to stay that way.
• The near-term way forward (Justin, Jen, Sheila):
  • Democrats are open to a fresh start and even criticism of aspects of the last two years, but only if approached respectfully and substantively.
  • Engage skeptics directly, including nonprofits and think tanks that previously declined meetings out of deference to regulatory leadership. Ask for meetings; don’t assume refusal. Treat every conversation as a chance to reset.
  • Accept that many members want to pass something solid and then “move on” to their core passions; make it easy to say yes by solving a real problem with clear consumer benefits.

Practical engagement guidance distilled from the panel

• Reframe the value proposition around affordability, access, and privacy/civil liberties.
• Lead with ethics and accountability; offer concrete commitments, not platitudes.
• Map every new Democratic office; tailor outreach to member interests and committees.
• Prioritize education for new, undecided members; avoid assuming deep technical familiarity.
• Invest beyond Congress: nonprofits, think tanks, and allied policy communities.
• Bring real users and real demos; move the conversation beyond “victims-only.”
• Pursue achievable legislative slices (stablecoins, tax fixes, discrete market structure items).
• Build bipartisan coalitions early; avoid reconciliation fantasies.
• For agencies: cultivate personal relationships with oversight leaders; deliver constituent wins.
• Tone matters: humility over hubris; an “apology arc” over a “revenge arc;” policy over politics.

Notable quotes and perspectives

• Chris Giancarlo: “Pull a pendulum far to one side, it snaps back hard.” On ethics: acknowledge self-dealing where it occurred to credibly advance policy.
• Justin Slaughter: “Only Democrats can talk to Democrats.” Users are the best validators; reach outside crypto’s echo chamber to the Democratic policy ecosystem.
• Sheila Warren: The industry must accept painstaking, consistent work to overcome its partisan image. Strategy reset: yes. Personnel reset: case-by-case. Be humble; understand you’re one meeting among many.
• Jen Brown: Ethics is the barrier to entry; without addressing it, nothing moves. Waters’ agenda is an olive branch; tax reform is ripe and necessary for users.
• Cody Carbone: Treat the new Congress as an education opportunity; avoid repeating 2025’s missed reset with Democrats; focus on winnable, non-divisive policy slices.

Bottom line

• The midterms created a window for a substantive reset with Democrats. The price of admission is ethics, humility, and bipartisan seriousness. Hyper-partisan tactics and revenge spending have backfired; a policy-first, user-centered case framed around affordability, access, and civil liberties can rebuild trust.
• The most realistic legislative wins live in narrower, practical bills (stablecoins, tax modernization, selective market-structure elements) anchored in bipartisan cooperation and steady agency relationships under intensified oversight.