The Daily Wolf | Crypto's easy years in Washington just ended

Crypto’s easy years in Washington may be over: Scott Milker said Democrats won both chambers, renewing scrutiny of the industry. Maxine Waters is likely to chair House Financial Services and Elizabeth Warren Senate Banking, though neither appointment is final. Reuters put crypto spending at about $176 million, but crypto and AI PACs won only two of 11 competitive races. Spending did not defeat Sherrod Brown in Ohio, despite more than $90 million spent against him across two elections, and Fairshake’s more than $10 million opposing Juliana Stratton in Illinois did not stop her winning. In Texas, Elon Musk spent nearly $500 million in elections, including more than $200 million in the state, and all his favored candidates lost; Milker noted that incoming Democratic officials there are relatively pro-crypto and received good grades from crypto PACs.

TV Cowan expects the Clarity Act to stall for two years, and Milker said it has effectively failed amid expected gridlock. He predicted that any future crypto bill could be written by Democrats hostile to the industry but probably would not pass, and said the president would veto it. Milker also expects congressional investigations and subpoenas concerning Trump’s crypto activities, including the Trump family and World Liberty Financial. The outlook is therefore less about an imminent new law than about increased oversight and political scrutiny.

Milker said crypto-friendly regulators will continue advancing pro-innovation positions despite the election, while Bitcoin will keep mining blocks and remain unaffected by political fights. He pointed to an SEC Division view of Canton coin as a digital commodity, a no-action letter, and the DTCC’s use of the Canton network for settlement. He also described SEC FAQs on commodities and securities, issued the previous day, as a positive regulatory signal. Crypto prices fell after the election result and then rebounded to new highs.

CFTC chair Michael Selig said clearing perpetual futures on stocks would give U.S. traders a regulated alternative to offshore, often unregulated venues. Milker said perpetual futures, first developed for crypto trading, are now coming to stock markets. Healthy Markets Association has challenged CFTC approval of perpetual derivatives on U.S. stocks and ETFs. A speaker said the association includes CBOE and Citadel Securities, and that CME and CBOE pushed back when Kalshi received approval for perpetuals; the speaker characterized the opposition as a response to potential business harm. The speaker also said the CFTC and SEC are advancing these products regardless of the election.

Block, described by a speaker as pro-crypto, a bitcoin holder, and a bitcoin trading provider, agreed in principle to a preliminary DOJ anti-money-laundering resolution. Proposed terms include a three-year deferred prosecution agreement and a $964 million penalty, reduced by a $200 million credit to $764 million, over an alleged failure to maintain an effective anti-money-laundering program under the Bank Secrecy Act. The speaker said the case shows that such violations are taken seriously regardless of who is in power, and that publicly traded legacy companies are not above the law.

Cybersecurity remains a threat across both traditional finance and crypto. A speaker said hackers attacked French bank Crédit Mutuel Arkéa conventionally, then moved stolen funds into crypto in an attempt to launder them; on-chain analysts identified about $133 million moving in connection with the attack. The speaker said their detection brought the incident wider attention, warned that every financial institution would face cyberattacks, and said AI would contribute to the threat. Binance’s incident report described attackers using social engineering and malware to compromise engineers’ devices, then stolen credentials to access wallet-signature services: a wallet engineer downloaded a tampered Homebrew installation in June, attackers learned about the wallet team in September, and they used stolen credentials on October 29. The speaker called it crypto’s biggest hack and cited a $6.3 billion heist.