Crypto Industry Faces Tougher Scrutiny as Democrats Take Control of Congress
With Democrats set to run both chambers in January, the crypto industry faces investigations into Trump family ventures and a stalled market-structure bill, after spending about $200 million on the midterm races.
Democrats’ victory in both chambers of Congress has put the cryptocurrency industry on notice, with tougher oversight and investigations into Trump family business ties now likely when the new Congress takes office in January.
Projections from Decision Desk HQ confirmed Democratic wins in the House and Senate in the November 3 midterm elections. The change in control puts Democrats in charge of the committees that oversee financial regulation, and Galaxy, the digital asset firm, said in an assessment on November 6 that it expects the policy agenda in Washington to move toward closer scrutiny of the sector.
Senator Elizabeth Warren of Massachusetts is expected to chair the Senate Banking Committee, and Representative Maxine Waters of California is expected to lead the House Financial Services Committee, according to the Galaxy assessment by its head of firmwide research, Alex Thorn.
World Liberty Financial in the spotlight
World Liberty Financial, the crypto venture tied to the Trump family, is the most likely focus of the new oversight. The venture issues the USD1 stablecoin, and Democrats have already raised questions about a reported $500 million investment by an Abu Dhabi-linked vehicle around the time of President Donald Trump’s inauguration. Any inquiry would look at whether business ties shaped regulatory decisions, though no formal allegation has been made and no hearing date or subpoena has been announced.
House Democrats are also discussing a market bill built from Waters’ proposed crypto investor and consumer bill of rights, a set of customer protections for crypto platforms. At the same time, the industry’s main legislative goal looks out of reach: the Digital Asset Market Clarity Act, which would set federal rules for crypto trading and divide oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission, passed the House in July 2025 but failed a Senate procedural vote 49-50 on September 15. Galaxy said it expects little movement in Congress on major digital asset legislation.
A costly election for the industry
The industry spent heavily to shape the outcome. Crypto-backed political groups put about $200 million into congressional races, according to CNBC, but the side they backed lost nine of the 12 competitive races tracked as of November 4, researcher Molly White found. In Ohio, former Senate Banking Committee Chair Sherrod Brown won re-election despite more than $60 million in spending by industry-aligned groups against him.
Markets reacted at once. The TRUMP memecoin fell more than 15% after the result, according to Cryptonews, and bitcoin dropped during a broader sell-off on November 5 after first recovering above $80,000.
One law is already on the books and stays in place: the GENIUS Act, signed in July 2025, set a federal framework for payment stablecoins. Without new legislation, the SEC and CFTC will keep writing crypto rules under powers they already hold, and federal agencies can still bring enforcement cases. Kara Calvert, Coinbase’s vice president of US policy, said the industry still has bipartisan support in Congress, pointing to Democratic votes for the Clarity Act in the House.
Reporting based on coverage by the Arabian Post, News.Bitcoin.com and the Financial Times.
