Washington’s long-awaited crypto legislation has hit yet another impasse, not over definitions or oversight this time, but over politics.
Months of behind-the-scenes negotiations have produced little consensus among lawmakers, who remain split on how to classify digital assets, divide regulatory authority, and determine investor eligibility. What began as a bipartisan attempt to modernize financial law has now fractured along party lines, threatening to delay any real progress until after next year’s elections, according to a new report from TD Cowen’s Washington Research Group.
Power Struggle Between the SEC and CFTC
The latest Republican draft seeks to formalize a jurisdictional split between the SEC and CFTC while introducing a new category for so-called “ancillary assets”, tokens that don’t fit neatly under existing securities law. Democrats countered with a more limited, DeFi-focused proposal aimed at curbing illicit activity, which GOP aides swiftly rejected as overly restrictive and incomplete.
The stalemate has turned increasingly personal. One Democratic staffer accused Republicans of leaking partial text to the press, saying their rush to schedule a markup before agreeing on language was like “planning a wedding before the first date.”
For industry watchers, the dispute is another reminder that crypto regulation in Washington rarely moves in a straight line.
Campaign Season Takes Priority
According to TD Cowen analyst Jaret Seiberg, the deadlock reflects shifting priorities rather than procedural failure. “This isn’t about policy anymore, it’s about timing,” he wrote, noting that as election season approaches, few lawmakers want to take controversial votes.
With just weeks left in the Senate calendar and campaigns ramping up, crypto reform is expected to slide further down the legislative agenda, once again leaving the industry waiting for clarity that may not come until after the ballots are counted.