The crypto sector has just hit its first major obstacle under Donald Trump’s second term after enjoying a period of unprecedented support in Washington. Senate Democrats recently blocked a crypto measure that had strong backing from the industry, signaling a shift in momentum on Capitol Hill. While the proposal isn’t entirely off the table, its path forward is uncertain, especially as political divisions deepen.
The sector has spent vast sums trying to win over lawmakers across the political spectrum, but partisan tensions are undermining that strategy. Democrats, aiming to push back against Trump’s influence, are increasingly hesitant to support measures seen as aligning with his interests.
One of the leading voices for crypto in the Senate, Republican Cynthia Lummis, expressed disappointment after efforts to rally Democratic support fell short. The failure highlights just how hard it is to pass bipartisan legislation in today’s political climate, particularly on a topic as divisive as digital currency.
While some Democrats, including Senate Minority Leader Chuck Schumer, have previously shown openness to crypto and accepted campaign contributions from the sector, progressive figures such as Elizabeth Warren remain staunchly opposed. They’ve raised red flags about Trump’s family connections to crypto ventures and are wary of any bill that might benefit them financially.
Reports surfaced that Schumer, just days before the vote, urged fellow Democrats behind closed doors not to commit to the measure. Others, like Warren, echoed concerns that crypto legislation could enrich Trump-linked businesses. Trump’s sons are involved in a stablecoin project that would likely gain from the proposed regulation. Additionally, Trump issued a memecoin days before taking office again, drawing further scrutiny.
Some Democrats argue that any crypto measure should include provisions to prevent sitting presidents from launching or profiting from digital tokens. Others, however, insist the focus should remain on crafting sound regulations rather than getting sidetracked by Trump-related issues.
Despite the recent defeat, the measure may return. John Thune, the Senate Majority Leader, filed a motion to reconsider, keeping the door open. Supporters of the bill, including Democrat Ruben Gallego, say they’re ready to revisit negotiations. Gallego pushed to delay the vote, hoping for more time to build consensus, but Republicans declined.
Political tensions are also tied to campaign donations. Crypto super PACs have poured millions into recent elections and are preparing for 2026. These groups reward lawmakers who align with their goals and target those who don’t. That dynamic is fueling concerns over undue influence.
Still, some in the industry see hope. Coinbase lobbyist Kara Calvert noted that despite the drama, serious engagement from both parties is a good sign. Talks are ongoing for a broader measure that could define how digital assets are regulated, though it may prove even harder to pass.
Companies like Canaan Inc. (NASDAQ: CAN) will be watching to see how the lawmakers move to eventually pass the regulatory system that the industry has been longing for.
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