Written by: jiayi

Recently, there has been a particular kind of anxiety circulating in CT: Trump is likely to lose in the midterms, and crypto policy will be in jeopardy.

I have felt anxious as well. Then I looked at the historical data of U.S. midterm elections, and it is surprisingly counterintuitive —

From 1946 to now, in 20 midterm elections, the party of the sitting president has lost seats in 18 of them. A 90% ratio.

On average, each time losing 28 House seats and 4 Senate seats. Losing is the norm. It’s more like a gravitational force in American politics — voters are always correcting their choices from two years ago.

So the crypto circle is anxious that Trump will lose? That's not called anxiety; that's called common sense.

Historically, there have only been 3 exceptions, each relying on a sufficiently large external event to overshadow voters' "corrective instinct": Roosevelt in 1934 riding on the rebound from the Great Depression, Clinton in 1998 benefiting from the Republican impeachment backlash, and Bush in 2002 capitalizing on the patriotic dividend after 9/11. All three were supported by extreme external events. Normal governance? Voters do not buy it at all. Because voters do not wish for excessive presidential power, this is also why most midterm presidents do not win.

Without a Great Depression-level bottoming out, with no opponent self-destructing, and without a national security-level moment of unity — midterms almost certainly mean losing seats.

2026: Trump's Fundamentals

First, let's look at the current data:

Trump's approval rating is 41%, disapproval rating is 57%, net approval rating is -15.2%. The economic approval rating is even worse — 31%, a career low.

The broader environment is even less friendly. The war in Iran is still ongoing. Tariffs have added an average of $233 to monthly expenses for American families. Oil prices could break $120 at any time. This is the largest tax burden increase relative to GDP since 1993.

The Republican Party holds only a 5-seat majority in the House. 5 seats. Kalshi's prediction market gives the Democratic Party an 84% chance of taking the House.

But the Senate is a different story. The map for the 2026 elections is relatively favorable for the Republicans — more Senate seats for the Democrats to defend. So the mainstream prediction is: the Democrats will take the House, and the Republicans will hold the Senate. A typical "divided government" scenario.

Wall Street's reaction to this outcome has historically been somewhat positive. Divided government = no one can push extreme policies = higher policy predictability. But for Trump's governance rhythm, this is a wall — legislation will be stalled, relying solely on executive orders.

If Trump loses the House, does he have no cards to play?

Divided government is indeed a wall, but not a dead end.

First is the executive order. This is the tool Trump is most familiar with and adept at using. Changes in SEC chairs, a shift in CFTC's stance, Treasury guidance on stablecoins, OCC's regulatory attitude towards banks holding crypto — these do not require Congressional approval. Trump signed over 220 executive orders in his first term, and the pace is expected to be quicker in the second term. Regulatory relaxations related to crypto can mostly be accomplished via executive paths.

Second is the appointment authority. Presidential nominations and Senate confirmations. If the Republicans hold the Senate, Trump will have a relatively smooth path for personnel arrangements in the SEC, CFTC, Fed, and Treasury. The "looseness" or "tightness" of regulation often depends more on who sits in the chair than on legislation.

Third is the reconciliation process. As long as the Republicans control the Senate plus one other chamber, budget-related bills can bypass the 60-vote threshold and pass with a simple majority. Tax-related crypto provisions (like how staking income is taxed, digital asset reporting rules) have a chance to go this route.

Fourth is the veto power. Even if the Democratic House passes anti-crypto bills, the Senate can stall them, and Trump can veto them again, effectively preventing them from becoming law. Defensive cards can be played.

What cannot be pushed through are structural legislations requiring majorities in both chambers — bills like the CLARITY Act regarding market structure and complete versions of stablecoin legislation. If these types of bills miss the window in the summer of 2026, executive orders can solve short-term issues but cannot provide the true "legal certainty" that the industry desires.

So even if Trump loses the House in the midterms, his crypto policy will not stop, but the pace will shift from the "legislative era" back to the "executive order era." Short-term benefits will continue, but long-term frameworks may have to wait until after 2028. What does this mean for crypto?

Two core bills are currently in progress: the CLARITY Act (market structure bill) and the stablecoin bill. The Senate released a 278-page draft in January this year and is currently stuck on stablecoin income clauses and DeFi regulatory definitions.

The legislative window is closing rapidly.

The Democratic strategy is very clear — drag it out. Drag it past the midterms. If they take the House, rewriting clauses or even outright shelving them are on the table. The most optimistic scenario is passing it before the summer of 2026; missing that window could push it to 2027 or even longer.

The crypto industry knows this point very well. Fairshake (the industry’s largest super PAC) currently holds $193 million in cash, backed by people from Coinbase, a16z, Ripple and others. The entire industry has invested at least $288 million in the midterm elections.

In one midterm election, the industry's stake is larger than in the last presidential election cycle.

But money cannot solve the fundamentals. The deciding factors of the midterm elections are the economy and emotions; industry lobbying is behind. Voters think about gas prices and grocery bills when they vote, not stablecoin income clauses. Stand With Crypto claims that there are nearly 300 pro-crypto lawmakers in Congress — this number looks good, but it represents the electoral dividends of 2024, and it could shrink by 2026.

Expectations and Disappointments Regarding Trump

Let’s mention another point that many people are unwilling to face.

Regarding Trump in the crypto field, we have placed too many expectations on him.

So at this stage, many people — even most people — feel that things are not as expected, and some are even disappointed. The progress of bills is slow, prices haven’t outperformed expectations, and policy rollout hasn’t been as direct as imagined.

But do not forget one thing: Trump is the most crypto-friendly president we have had so far. He opened up a different world order for crypto.

From the change in SEC's stance, to the opening of ETFs, to the stablecoin bill entering the Congressional agenda, to the election of pro-crypto lawmakers into Congress — these were unimaginable in 2022. The discussion we are having now about whether the "legislative window is closing" is itself a huge step forward. Back in 2022, there was no window to discuss.

Disappointment stems from having raised expectations too high. But the landscape has truly changed.

In Conclusion

It is highly likely that the Republican Party will lose the House in the midterm elections. The historical pattern is evident; 90% of midterm governing parties will lose, unless extreme external events occur. Currently, none are present.

The true legislative window for crypto is before the summer of 2026. Missing this window may mean core bills will not come until after 2027. The industry's attention should be focused on legislative progress rather than predictions about the midterm election results.

The industry’s political investment of $288 million is essentially buying time. It is about getting core bills pushed through before Democrats potentially take the House.

The current situation of the crypto industry is somewhat like George W. Bush after 2002 — the cards on hand look decent, but the time window is closing.

Expectations can be adjusted; the landscape will not retreat. These are two different matters.

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