Will the US Crypto Bill Pass in This Critical January Window?

The crypto bill faces its most decisive moment. With just days remaining before late-January funding expires and the Senate’s self-imposed legislative deadline approaches, the digital asset market regulation battle is reaching a critical juncture. Industry experts peg the odds of comprehensive crypto bill passage in 2026 at just 50-60%—a coin-flip scenario that hinges on unprecedented political cooperation and swift agreement on deeply divisive issues.

“We’re in the home stretch but facing major headwinds,” explained a cryptocurrency industry representative interviewed by The Block. The coming weeks will determine whether Congress can reconcile competing interests or if crypto regulation gets shelved indefinitely.

Racing Against Time: Why Late January Is the Make-or-Break Moment

The crypto bill’s timeline is unforgiving. The Senate Banking and Agriculture Committees each drafted separate legislation that must be merged into a unified bill. Committee officials indicated they’re targeting early 2026 approval, but the clock is ticking mercilessly. A Senate Banking Committee spokesperson confirmed recent progress with Democratic colleagues: “We have made significant progress with our Democratic counterparts in advancing bipartisan legislation on the structure of digital asset markets and look forward to approval in early 2026.”

However, the window is narrower than it appears. Congress faces an artificial deadline: government funding expires in late January, creating the backdrop for potential shutdowns that would halt all legislative work. Beyond that, the midterm elections loom, consuming lawmaker attention and political bandwidth throughout the year’s second half.

“If we don’t see that progress in January, I’ll be very pessimistic,” said Cody Kabun, CEO of the Chamber of Digital Commerce. Industry watchers are watching January like hawks, treating it as the litmus test for whether crypto bill passage remains viable.

The Battleground: Five Explosive Issues Threatening the Crypto Bill

Multiple fault lines run through the crypto bill negotiations, each capable of derailing the entire legislative effort.

Stablecoins and the Bank-Crypto Divide

One central flashpoint pits traditional banking against the crypto industry. Banks argue the GENIUS Stablecoin Act—which became law last summer—contained dangerous loopholes. Specifically, they contend that stablecoin issuers shouldn’t be permitted to offer interest-bearing products, fearing these instruments would function as unregulated savings accounts, creating what bankers call “distorted market incentives.”

The crypto industry disagrees fundamentally. They view interest-bearing stablecoins as legitimate market competition and fair innovation. This philosophical divide threatens to unravel the crypto bill unless negotiators find middle ground.

DeFi Regulation and the SEC-CFTC Turf War

Another explosive issue centers on decentralized finance oversight. How should DeFi protocols be regulated for anti-money laundering compliance? Which agency—the SEC or CFTC—should determine whether tokens are securities or commodities?

This question carries enormous weight. “If legislation stipulates the SEC will be the primary decision-maker, it looks like the Gary Gensler path, where the SEC is the only authority deciding everything,” warned Kabun, referencing the former SEC chairman’s aggressive stance toward crypto. Industry players fear SEC dominance would stifle innovation. Yet securities regulators argue they must retain authority to prevent fraud.

The Trump Conflict-of-Interest Landmine

President Donald Trump’s substantial crypto holdings create an ethics minefield. Bloomberg estimated in July that Trump has profited approximately $620 million from his family’s cryptocurrency ventures, including World Liberty Financial’s DeFi and stablecoin projects. The Trump family also holds a 20% stake in the Bitcoin mining company American Bitcoin.

Most controversially, Trump and two of his sons launched the Trump and MELANIA meme coins immediately before his inauguration, attracting public scrutiny and Democratic criticism.

Republican Senator Cynthia Loomis revealed in December that the White House demanded review of any ethics clause in the crypto bill. “I submitted the ethics clause text to the White House for consideration,” Loomis stated at the Blockchain Association policy summit. Democrats have already signaled they’ll weaponize any Trump conflict-of-interest concerns during the election cycle, threatening to inject partisan acrimony into negotiations.

CFTC Leadership Vacancies and Power Struggles

The Commodity Futures Trading Commission—positioned to gain expanded crypto oversight authority—faces crippling staffing shortages. Four commissioners departed or announced departures over the past year: Democrats Christine Johnson and Kristi Goldsmith Romero, and Republicans Carolyn Van and Summer Mersinger. Van, the current acting chair, plans to depart once Mike Seliger is confirmed as the new chairman, leaving just one Republican commissioner to guide the agency.

This creates a dangerous power vacuum. “No senator would want to hand such vast authority to an agency operating with only one commissioner instead of the required five-person committee,” Kabun explained. Democrats have weaponized this vacancy situation as a negotiating tool, further complicating crypto bill passage.

The Clarity Act Reconciliation Challenge

The House already passed its own digital asset regulatory bill—the Clarity Act—last summer. The Senate’s eventual crypto bill must be reconciled with the House version, creating yet another negotiation layer. This reconciliation process demands additional rounds of committee work and full chamber votes.

Political Risk: The Midterm Election Shadow

Beyond technical disagreements lies a more fundamental political reality: the 2026 midterm elections will consume congressional focus starting in spring. Lawmakers will increasingly prioritize reelection campaigns over legislative work.

Kevin Wysocki, policy director at Anchorage Digital, is clear about the timeline: “We’re focused on the first half of 2026. After that, election matters take center stage.” He estimates a narrow window remains “around the end of 2026, after elections,” but crypto industry observers view this as unlikely—momentum rarely revives after an election cycle interrupts it.

Rebecca Liao, CEO of Saga and former member of Joe Biden’s 2020 presidential campaign, warned of another threat: “We’re seeing Democrats build a message around ‘affordability.’ Anything appearing privileged or suggesting improper benefits for the president will be repeatedly attacked in Democratic messaging.” The crypto bill could become collateral damage in broader political warfare.

The Government Shutdown Sword of Damocles

Congress faces an immediate crisis: temporary funding legislation expires in late January, creating a cliff edge. Congress failed to reach a permanent funding agreement before November’s 43-day shutdown, and the pattern threatens to repeat.

If the government shuts down, all legislative work on the crypto bill halts immediately. With January representing the critical push window, even a brief shutdown would destroy momentum and compress the timeline further. “They need to show progress right from the start,” Kabun emphasized. Industry observers treat avoiding another shutdown as essential to crypto bill survival.

The 50-60% Gamble: Will the Crypto Bill Pass?

When asked directly about passage odds, industry leaders remain cautiously pessimistic. Kevin Wysocki believes there’s approximately a 50% probability the crypto bill becomes law in 2026. “What’s positive is that there’s substantial communication between Republican and Democratic members of Congress, which is a very positive sign,” he told The Block. “But some issues are difficult. The legislation covers banking, securities, commodities—so it’s genuinely complex.”

The variables must all align: Democrats and Republicans must overcome their ideological divisions; banks and crypto firms must find compromise on stablecoins; regulatory agencies must agree on jurisdiction; Trump’s ethics concerns must be managed; CFTC leadership must be confirmed; the government must avoid shutdown; and the entire process must complete before the election season kills legislative energy.

What If the Crypto Bill Fails?

Industry observers insist failure isn’t an option long-term. Financial institutions have already entered digital assets, creating regulatory chaos. Rebecca Liao emphasized the fundamental need: “For cryptocurrencies to achieve scale and mainstream adoption, you genuinely need regulatory clarity. I think people will push for legislation again.”

However, failure in 2026 would delay regulation indefinitely, pushing comprehensive crypto market structure legislation into 2027 or beyond—if political conditions ever realign favorably. The current crypto bill represents the closest Congress has come to comprehensive digital asset regulation. If this moment passes, a new legislative effort could take years to materialize.

The crypto bill’s fate will likely clarify within weeks. Late January represents the inflection point where either Congress demonstrates momentum and realistic progress, or the dream of 2026 crypto market structure legislation dies on the vine. Industry participants are braced for either outcome—but hoping desperately for passage.