The crypto industry has just suffered a paradoxical defeat: Its biggest backer, President Donald Trump, inadvertently helped scuttle chances for a major legislative win thanks to revelations of the riches he and his family have made off of their crypto ventures.

The industry is now scrambling to advance its agenda through crypto-friendly regulation instead of legislation. But the prospect of Democratic control of one or both chambers of Congress after the November 2026 midterm elections, as well as potentially winning the White House in 2028, leaves the long-term durability of those gains uncertain.

At stake was legislation that would have provided light-touch regulation over crypto assets. The industry, which had enjoyed a series of wins since Trump started his second term, had secured bipartisan support for the measure, dubbed the Clarity Act, and poured hundreds of millions into lobbying.

But the steady drip of news in the spring and summer of 2026 about the Trump family’s lucrative crypto businesses ultimately undermined those efforts. Democratic support in the Senate faltered, and after several attempts at a compromise, the bill died on a procedural vote on Sept. 15, 2026, falling short of the required 60-vote majority.

As a scholar of financial regulation, I believe the growing backlash against Trump’s conflicts of interest surrounding his crypto wealth changed the political calculus. The Senate Democrats who had initially supported the measure increasingly feared they would be seen as voting to further enrich Trump. While the final bill contained some ethics provisions, they didn’t suffice to keep those Democrats on board.

This outcome leaves the industry in limbo and unsure of how to spend its considerable campaign war chest ahead of the midterms. If it decides to invest heavily to defeat crypto-skeptical Democrats, I believe it could risk a backlash should Democrats retake the House, the Senate, or both.

Under that scenario, Democrats could launch congressional investigations or introduce........

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