The U.S. votes for the House of Representatives and Senate on Tuesday, potentially setting the direction for the next two years of legislative and regulatory action.
The crypto industry has tried to play a major role in the election through donations, though results have been tempered at best. Despite that, a number of candidates with strong views on crypto are on the ballot, and whether or not they’re elected – as well as which party ends up controlling the House and the Senate – could well determine what sort of legislative priorities receive attention next year.
Despite their importance, the main story Tuesday was the surprise announcement by Sam Bankman-Fried, a major donor and the founder of trading firm FTX, and Changpeng “CZ” Zhao, the founder of Binance, that the latter had signed a non-binding letter of intent to acquire FTX.
The news came days after CoinDesk first reported that much of FTX sister firm Alameda Research’s balance sheet was composed of FTX’s own exchange token FTT, raising questions and concerns that the company may not have been as well-collateralized as it purported to be.
Prior to last week’s news, Bankman-Fried was a prominent face in Washington D.C, telling a banking conference last month that he spent much of his time talking to lawmakers and regulators. His influence may wane, given his company’s sudden decline, and legislative issues like the Digital Commodities Consumer Protection Act, which he supported, may suddenly lose industry backing.
ND (12:10 a.m. ET): While a number of results have rolled in, it still seems to be far too early to tell whether Democrats retain control of both houses of Congress or if Republicans will take control of one or both bodies. As of midnight ET, the New York Times rated the Senate a tossup, and the House leaning Republican.
The crypto markets remained focused on the FTX/Alameda collapse, with few in the crypto industry focusing on midterms Tuesday. The market meltdown appears to have halted, at least for the moment. The price of major cryptocurrencies, including bitcoin, ether, BNB and XRP remained relatively steady over the past hour, in sharp contrast to downturns earlier in the day, according to CoinGecko.
The outlook for the crypto industry remains up in the air. A number of pro-crypto lawmakers have won their races, from both sides of the aisle. Many of the driving forces behind legislation that could move in the coming year have maintained their seats, and lawmakers from both parties seemed confident that legislation would move forward regardless of the political makeup of Congress.
The confounding factors might be the market itself. Bankman-Fried and FTX’s collapse will likely have a negative impact on how crypto is perceived in Washington. Indeed, two longtime supporters of crypto, Republican Rep. Patrick McHenry and Senator Cynthia Lummis, both argued that the collapse is a sign that the industry needs clearer regulation.
JH (11:38 p.m. ET): The son of the Rev. Jesse Jackson – Jonathan Jackson – is one of the few congressional candidates in this election to have openly advocated for cryptocurrency during his campaign. The Democrat was easily winning his Chicago district with 79% of the vote, so the crypto industry’s political-action committees can chalk up a victory there, having spent considerably to support his primary. In fact, they spent so much that Jackson had to issue a statement that said the crypto dollars were technically “independent expenditures” under campaign finance rules and therefore out of his hands.
ND (11:31 p.m. ET): New York Governor Kathy Hochul won reelection Tuesday night. Hochul has sat on a bill to prohibit new carbon-based crypto mining facilities for two years, which the state legislature passed earlier this year. She told reporters on numerous occasions that she was still reviewing the bill, but she hasn't expressed many other views on crypto.
JH (11:31 p.m. ET): Republican Markwayne Mullin, also a recipient of crypto largesse, was projected to win a full term in the Senate from Oklahoma with 62% of the vote. He won a primary to fill the seat earlier this year.
JH (11:22 p.m. ET): Democratic Reps. Josh Gottheimer (D-N.J.) and Richie Torres (D-N.Y.), members of the congressional blockchain caucus, were holding onto their seats with about 58% and more than 82% of the votes, respectively. Several other House candidates supported by the cryptocurrency industry also headed toward the winners’ circle Tuesday night, including Glenn Ivey, a Democrat who crushed his opponent in Maryland, and Republican Mark Alford, who sailed to a commanding victory in Missouri. And Missouri’s attorney general, Eric Schmitt, will be the next senator there, having been backed by one of the main industry PACs.
The industry may recall New York Democratic incumbent Rep. Nydia Velazquez, who held a hearing on blockchain technology and small businesses in 2020 (which didn’t seem to produce any particular congressional action). She’s winning re-election, so she’ll be expected to return to the House Financial Services Committee.
CL (10:40 p.m. ET) Republican J.D. Vance has an 8-point lead over his Democratic competitor, Tim Ryan, in the battle for retired Ohio Senator Rob Portman’s open seat. The New York Times is reporting Vance is “very likely” to win, with 82% of the votes in. Both Vance and Ryan have been vocal about their support for the cryptocurrency industry. The outgoing Portman was a key author of the bipartisan infrastructure law which contained a crypto tax provision the industry lobbied unsuccessfully to defeat.
ND (10:35 p.m. ET): Rep. Warren Davidson, a leading pro-crypto Republican, won reelection to the House of Representatives. Davidson was the author of the Token Taxonomy Act, an effort to create some legislative clarity around how cryptocurrencies could be regulated in the U.S.
ND (10:20 p.m. ET): The crypto markets have remained relatively steady over the past hour or so, a bit of a contrast from the rest of the day. Bitcoin’s price traded around $18,000, while ether traded around $1,300, down only 1 or 2% over the past hour, according to CoinGecko. While prices have been relatively calm since polls began closing, they’re still down heavily – at least 10% or more for some major cryptocurrencies – over the past day.
Markets were shocked early on Tuesday after Sam Bankman-Fried and Changpeng Zhao announced Binance could acquire FTX under a non-binding letter of intent. The terms of the deal were not disclosed, and neither was a timeline for when the deal might close.
Prediction markets are unsure whether the deal will actually close, giving CZ the same odds of closing as they are of the deal falling through.
CL (10:09 p.m. ET) The New York Times is predicting that former Republican Congressman Ted Budd will win the senate seat in North Carolina, beating his Democratic competitor, Cheri Beasley. 84% of votes are currently in, and Budd holds a three-point lead over Beasley. As a congressman, Budd was on the Congressional Blockchain Caucus and led the charge on several crypto-friendly policy initiatives.
ND (10:05 p.m. ET): Colorado Governor Jared Polis, a Democrat, won reelection. Polis founded the Congressional Blockchain Caucus as a lawmaker in the House of Representatives, and has remained crypto-friendly during his terms as governor.
ND (9:55 p.m. ET): Rep. Patrick McHenry, the senior-most Republican on the House Financial Services Committee, won another term Tuesday night. The Congressman, who was one of the driving forces behind a highly-anticipated bill regulating stablecoins, is poised to take over the Financial Services Committee if Republicans take the House of Representatives.
JH (9:55 p.m. ET): Texas Democrat Jasmine Crockett, who was supported by an influx of crypto industry money during her primary race, was on track to easily win her seat. She represented a strategy the industry leaned on in its campaign giving this year, to focus on primaries in districts with dominant party majorities, taking the stress off their candidates’ need for support during the general election. Crockett had more than 76% of the vote at the halfway point.
CL (9:37 p.m. ET): Incumbent Texas Governor Greg Abbott, a Republican, looks primed to beat his Democratic opponent Beto O’Rourke. Though only 44% of votes are in, some outlets including Fox have already called the race in Abbott’s favor. Abbott has been a strong supporter of the crypto industry in Texas, where miners have flocked to take advantage of the state’s cheap electricity.
JH (9:33 p.m. ET): Some of the earliest East Coast states to close their polls started to hint at what all those talking heads have been talking about: The Republicans may find the momentum to seize the House.
The early results in district's like Virginia's 2nd and 7th were widely seen as bellwethers, and they both showed strong Republican numbers, though the final tallies are far from over. But other close battles, such as in Indiana’s 1st and Ohio's 1st, are so far seeing a strong start in the Democrats’ favor.
If the Republicans do win this majority, it means a new speaker of the House, of course, and also new committee chairmen – including for the House Financial Services Committee and the House Agriculture Committee. The former oversees the banking regulators and the Securities and Exchange Commission. The latter oversees the Commodity Futures Trading Commission. These are the panels where a lot of the most important work is going to be done on bills that one day regulate cryptocurrencies in the U.S.
Fortunately for the crypto industry, digital assets oversight isn't yet one of those categories that sends Democrats and Republicans into their trenches. Even with the bullets flying next year, lawmakers may still find a path through this neutral territory to make crypto legislation happen.
ND (9:07 p.m. ET) The Associated Press projects that Rep. Darren Soto (D-Fla.) won another term representing his district in the House of Representatives. Soto has long been a member of the Congressional Blockchain Caucus, and reintroduced the Token Taxonomy Act alongside Rep. Warren Davidson (R-Ohio) last year.
ND (9:00 p.m. ET): The Associated Press and CNN are predicting that Katie Britt has won a Senate seat, representing Alabama (with 1% of precincts reporting in at press time). The Republican will succeed Sen. Richard Shelby (R-Ala.), who famously blocked unanimous consent against an amendment to last year’s bipartisan infrastructure bill which would have modified a crypto tax provision.
Britt said she supports crypto, accepting bitcoin, ethereum and dogecoin for campaign donations and announcing her “staunch support” for the crypto ecosystem.
JH (8:47 p.m. ET): Sen. Raphael Warnock (D-Ga.) is showing early hope for defending his young seat against his Republican challenger, Herschel Walker. This is one of the handful of U.S. Senate seats that can tip the 50-50 balance in that chamber, where Democrats have enjoyed their tie-breaking advantage.
Warnock had more than 50% of the vote with about 44% of the count complete, with Walker at 48%.
The Georgia incumbent is a member of both the Senate Banking Committee and the Agriculture Committee, which will probably be the two most important committees when it comes to the future of crypto regulations. However, Warnock hasn't yet been a major voice in digital-assets issues. He did sign on to a bill to make it harder for Russia to undermine sanctions by using cryptocurrencies.
CORRECTION (Nov. 9, 2022, 04:56 UTC): Corrects that Markwayne Mullin won a primary runoff election to compete in the Senate race earlier this year.