Crypto insiders aren't counting on silver linings in Congress' 'lame duck' session

The crypto industry had an unusually long time in Congress' spotlight this year, and those who work closely on trying to get lawmakers to pursue digital assets legislation are expecting things to go pretty dark for a while.

The final weeks of this Congress — known as the "lame duck" session between an election and the January 3 shift to the next session — was once thought to be a possible window for crypto work that didn't get done earlier in the year. That's unlikely, according to several people in the field, though there are some narrower objectives that have a remote chance at getting attention.

Cody Carbone, CEO of the Digital Chamber, told CoinDesk he sees "little hope" in substantive crypto legislative progress in the coming weeks that'll pick up a baton from the failed Digital Asset Market Clarity Act effort. A lot of other efforts will be fighting for limited time, and he said, "there also seems to be a general 'moving on' from lawmakers on Clarity."

Lame duck sessions can often surprise with last-minute legislative injections into larger spending packages or other must-move bills that are known in congressional circles as "Christmas trees" because of all the smaller legislative ornaments that might be hung on them. While nobody can rule out a crypto measure sneaking into such a scenario, the industry's experts in Washington aren't holding their breath.

"It currently doesn't look like a year-end spending package will be a Christmas tree, but that can change, and there could be interest in clearing the decks on certain bipartisan issues," Ryan Eagan, the director of U.S. federal affairs at the Crypto Council for Innovation, told CoinDesk.

The midterm congressional elections and the surge of new Democrats about to remake Congress has reset the expectations and priorities for both parties. Republicans know they now have only weeks remaining to get things done with their doomed majority, and much of that work will be in trying to get federal officials confirmed in the Senate. And Democrats won't be eager to make costly compromises now, because they know they'll hold all the gavels in another six weeks.

Nominee spree

On the confirmation front, President Donald Trump made a move to nominate two people to join the Securities and Exchange Commission and two for the Commodity Futures Trading Commission — including one Democrat for each, following nearly two years in which Trump's administration has sought to strip Democrats from positions of authority. The Senate Banking Committee scheduled a hearing this week to consider the SEC nominees, and the Senate Agriculture Committee told CoinDesk it hasn't yet scheduled the CFTC confirmation hearing but will "soon."

"We believe these nominations are likely to be confirmed before Congress adjourns for the year," financial policy analyst Jaret Seiberg wrote in a Friday client note.

One crypto insider said the confirmation pressure will be intense for Republicans. The two markets regulators are in an especially important spot for both the confirmation discussion and for the future policy hopes of the crypto industry.

"The lame duck has a short calendar and a long to-do list, so the window for crypto legislation is narrow," said Kristin Smith, the head of the Blockchain Association, in a statement. "Either way, the most important regulations for crypto in America are being written at the SEC and CFTC right now."

Both agencies will remain under Republican control (answering to congressional Democrats only in an oversight and budgeting capacity) for the duration of Trump's term in office, expiring at the start of 2029. In that period, they can continue executing Trump's agenda for crypto, prediction markets and artificial intelligence whether Democrats like it or not.

As for the coming weeks on Capitol Hill, the lawmakers will be looking at the typical range of bills on defense spending and U.S. farming needs.

Faster permitting

One live bill does touch crypto in a narrow sense — specifically in bitcoin mining's reliance on data centers — and it's been on the move, recently clearing an initial hurdle on the Senate floor. The bipartisan legislation would speed up the federal permitting process for data centers and other infrastructure, but it would also require that they pay full cost for energy usage.

"Some of our miners are supportive of the bill and happy to eat the higher costs for the sake of permitting speed and federal certainty," Carbone said. "Others are hung up on paying for new electrical grid buildouts, let alone paying above-cost energy prices that states will be permitted to impose."

Whether it passes or not, it won't shift crypto's U.S. destiny. That is more likely to be in the hands of the new, incoming members of Congress.

"Nearly one in four members of the next Congress will be new, and many are about to get their first briefing on crypto," Smith said. "We want it to come from us.”

At this point, some narrower-gauge legislative possibilities are hanging out there for crypto, including the perceived need for novel tax treatment; the potential for a streamlined move to fill the gap in crypto spot market authority with new CFTC powers; and the return of some of the bipartisan agreements during the Clarity Act talks, including on illicit-finance protections and even stablecoin yield.

But the lame duck hasn't typically produced much success for the industry.

In late 2021, Congress slipped an important crypto tax provision into an infrastructure bill, and the industry desperately sought during the 2022 lame duck session to get it changed, but advocates couldn't manage to attach their amendments to a bill. Then in 2024, there were efforts to negate a Securities and Exchange Commission accounting guidance (Staff Accounting Bulletin 121, which was later erased by new SEC leadership) and to attach the Financial Innovation and Technology for the 21st Century (FIT21) Act to another bill to get a Senate sign-off, but neither notion worked out.

A lot of people would like to see something done in the short term that addresses the confusion around crypto tax rules, CCI's Eagan said, so the industry is keeping hope alive.

"Lame duck is always the most chaotic part of the congressional calendar, so you can never rule anything out explicitly," he said.