Author: jiayi
Recently, a particular anxiety has become popular on CT: Trump is going to lose in the mid-term and the crypto policy is doomed.
I also felt anxious. Then I looked through historical data on US midterm elections, and very counterintuitively...
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From 1946 to the present, in 20 midterm elections, the president's party has lost seats in 18 of them. That's a 90% rate.
On average, they lose 28 House seats and 4 Senate seats each time. Losing is the norm. It's more like a gravitational pull in American politics—voters are always revising their choices from two years ago.
So, is the crypto community worried that Trump is going to lose? That's not anxiety, that's common sense.
Historically, there have been only three exceptions, each time relying on a sufficiently significant external event to override voters' "corrective instincts": Roosevelt in 1934 benefited from the rebound after the Great Depression; Clinton in 1998 faced the backlash of Republican impeachment; and George W. Bush in 2002 benefited from the patriotic dividend following 9/11. All three were supported by extreme external events. Normal governance? Voters simply don't buy it. Because voters don't want excessive presidential power, this is why most midterm presidents don't win.
Without a Great Depression-level bottoming out, without the opponent's self-destruction, and without a national security-level moment of unity—they will almost certainly lose their seat in the medium term.
2026: Trump's Fundamentals
Let's look at the current data first:
Trump's approval rating is 41%, his disapproval rating is 57%, and his net approval rating is -15.2%. His economic approval rating is even worse—31%, a career low.
The overall environment is even less favorable. The war with Iran 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 hold only a 5-seat majority in the House of Representatives. Kalshi predicts the market values an 84% probability of the Democrats winning the House.
But the Senate is a different story. The map for the 2026 elections is relatively favorable to the Republicans—the Democrats have more seats to defend. Therefore, the prevailing prediction is that the Democrats will win the House, and the Republicans will retain the Senate. A classic "divided government" scenario.
Historically, Wall Street's reaction to this outcome has tended to be positive. A divided government means no one can push for extreme policies, leading to higher policy predictability. However, for Trump's governing style, this is a major obstacle—legislation is ineffective, leaving him with only executive orders.
If Trump loses the House of Representatives, will he be out of options?
A divided government is indeed a wall, but not a dead end.
First, there are executive orders . This is Trump's most familiar and readily available tool. Changing the SEC chairman, shifting the CFTC's stance, issuing Treasury guidelines on stablecoins, and the OCC's regulatory attitude towards bank-custodied cryptocurrencies—none of these require congressional approval. Trump signed over 220 executive orders during his first term, and the pace accelerated in his second. Most of the deregulation related to cryptocurrencies can be achieved through the executive route.
Secondly, there's the power of appointment within institutions . The president nominates, and the Senate confirms. If the Republicans retain control of the Senate, Trump's personnel arrangements within the SEC, CFTC, Fed, and Treasury are largely smooth. The "looseness" or "tightness" of regulation often depends not on legislation, but on who sits in that chair.
Third is reconciliation . If Republicans control the Senate plus either chamber, budget bills can bypass the 60-vote threshold and pass with a simple majority. Tax-related crypto provisions (such as how staking earnings are taxed and digital asset reporting rules) have a chance to go down this path.
Fourth is the veto power . Even if the Democratic-led House passes an anti-crypto bill, it's unlikely to reach the Senate stage if the Senate blocks it or Trump vetoes it. This is a defensive strategy.
What truly stalls is structural legislation requiring a majority in both houses of Congress —a complete version of market structure legislation like the Clarity Act or stablecoin legislation. If such legislation misses the window of opportunity in the summer of 2026, executive orders can solve short-term problems, but they cannot provide the industry with the "legal certainty" it truly desires.
So even though Trump lost the House of Representatives in the midterm elections, his crypto policy won't stop, but the pace will revert from the "legislative era" back to the "executive order era." Short-term benefits will continue, but the long-term framework may have to wait until after 2028. What does this mean for crypto?
Two core bills are currently in process: the Clarity Act (Market Structure Act) and the Stablecoin Act. The Senate released a 278-page draft in January of this year, but it is currently stuck on the stablecoin yield provisions and the definition of DeFi regulation.
The legislative window is closing rapidly.
The Democrats' strategy is clear—delay. Delay until after the midterms. If they win the House, rewriting the provisions or even simply shelving them are options. The most optimistic scenario is that it will pass before the summer of 2026 ; if they miss this window, it could be delayed until 2027 or even longer.
The crypto industry knows this best. Fairshake (the industry's largest super PAC) currently holds $193 million in cash, backed by Coinbase, a16z, Ripple, and others. The entire industry has poured at least $288 million into the midterm elections.
The industry is betting more heavily on a single midterm election than it did on the last presidential election cycle.
But money can't solve the fundamentals. The deciding factors in the midterm elections are the economy and sentiment; industry lobby comes second. Voters are thinking about oil prices and grocery bills when they vote, not stablecoin yield terms. Stand With Crypto says there are now nearly 300 pro-crypto members of Congress—a nice number, but it's a 2024 election bonus that could shrink by 2026.
Expectations and disappointments regarding Trump
Let me mention another point that many people are unwilling to confront.
We placed too many expectations on Trump in the crypto space.
So at this stage, many people—even most people—feel less satisfied than expected, and are even somewhat disappointed. The bill is progressing slowly, prices haven't kept pace with expectations, and policy implementation hasn't been as direct as anticipated.
But let's not forget one thing: Trump is by far the most crypto-friendly president. He has ushered in a different world order for crypto.
From the SEC's shift in attitude to the liberalization of ETFs, to the stablecoin bill entering the congressional agenda, to pro-crypto lawmakers being elected to Congress—these were unimaginable in 2022. The very fact that we are now discussing whether the "legislative window is closed" is a huge step forward. In 2022, there was simply no window for discussion.
Disappointment stems from expectations being set too high. But the landscape has truly changed.
at last
It's highly probable that the Republicans will lose the House of Representatives in the midterm elections. Historical patterns dictate that ruling parties lose in 90% of midterm elections, unless extreme external events occur. Currently, none of those events have occurred.
The real window of opportunity for crypto legislation is before the summer of 2026. If this window is missed, core legislation may not be available until after 2027. The industry should focus on the legislative progress, not on predicting the midterm election results.
The $288 million investment in industry politics is essentially buying time. It's about pushing through core bills as much as possible before the Democrats gain control of the House of Representatives.
The current situation of the cryptocurrency industry is somewhat similar to that of George W. Bush after 2002—the cards in their hand look good, but the window of opportunity is closing.
Hopefully things can be corrected, but the overall situation won't regress. These are two separate things.
