President Trump's crypto advisor has issued a stark warning to industry holdouts threatening to derail comprehensive regulatory legislation. With Democrats potentially regaining Senate control in 2026, the window for crypto-friendly lawmaking could slam shut faster than anticipated.
According to Patrick Witt, Executive Director of the President's Council of Advisors for Digital Assets, on X: "No bill is better than a bad bill. What a privilege it is to be able to say those words thanks to President Trump's victory, and the pro-crypto administration he has assembled."
However, Witt cautioned against perfectionism derailing progress. He emphasized that compromises will be necessary to secure 60 Senate votes required for passage of the CLARITY Act, warning that rejecting the current proposal could backfire spectacularly.
"You might not love every part of the CLARITY Act, but I can guarantee you'll hate a future Dem version even more," Witt stated, invoking memories of the restrictive Dodd-Frank Act passed after the 2008 financial crisis.
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Political Clock Ticking as Midterms Loom
The urgency stems from deteriorating Republican prospects for 2026. Recent polling data shows Democrats maintaining consistent leads in generic congressional ballot questions, with surveys showing advantages between 2-5 percentage points.
YouGov's latest poll conducted January 16-19 shows Democrats leading 43% to 39%. Morning Consult's simultaneous survey revealed a 45% to 43% Democratic advantage, while CNN/SSRS polling indicated a 5-point gap at 46% to 41%.
Prediction markets reflect even starker expectations. Polymarket traders currently assign Republicans a 66% probability of retaining Senate control through November 2026, down from higher confidence levels earlier this year. Democrats hold a 35% chance according to the same market, with over $461,000 in trading volume.
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The Senate Banking Committee postponed its scheduled markup vote last week amid industry divisions over stablecoin yield provisions and DeFi regulations. Coinbase CEO Brian Armstrong withdrew support citing concerns about tokenized equities restrictions, creating fractures within the pro-crypto coalition.
What Hangs in Balance
The Digital Asset Market CLARITY Act passed the House in July with bipartisan support, securing a 294-134 vote margin. The legislation establishes the CFTC as primary regulator for digital commodities while granting the SEC authority over securities-classified tokens.
Senate Banking Committee Chair Tim Scott has committed to advancing legislation before midterm elections, telling media outlets he believes passage remains achievable in 2026. The White House crypto council maintains daily engagement with both Senate committees working on the bill.
"We're at it morning until night every day, and we're continuing to make a lot of progress," Witt told attendees at Ripple's Swell conference in November.
The legislation addresses approximately 80% of the crypto market left unregulated by the GENIUS stablecoin law signed earlier. It creates registration pathways for exchanges, brokers, and custodians while defining boundaries between commodity and security classifications.
Industry divisions persist over stablecoin reward programs, with traditional banks advocating restrictions while crypto companies defend current practices. The latest Senate draft attempts compromise language permitting transaction-based rewards while limiting interest payments on holdings.
Ethics provisions targeting Trump family conflicts also remain contentious. Democrats demand safeguards given the administration's expanding crypto footprint, including World Liberty Financial's recent federal bank license application. Republicans reject what they characterize as unconstitutional targeting of the president.
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Despite obstacles, Witt maintains optimism that Senate committees will produce legislation acceptable to House Republicans. He urged skeptics to "maintain perspective," noting that "for every one issue in the market structure draft giving you heartburn, you're getting several pieces of candy."
The executive director's message carries particular weight given his role coordinating between Capitol Hill and the administration. With policy experience from Trump's first term at the Office of Personnel Management and Department of Defense, Witt brings institutional knowledge to navigating congressional procedures.
His warning about Democratic legislation echoes concerns that future regulatory frameworks could emerge during crisis conditions, similar to how Dodd-Frank reshaped financial regulation after market turmoil. Such scenarios typically favor restrictive approaches over innovation-friendly policies.
"Assuming a multi-trillion dollar industry will continue to operate indefinitely without a comprehensive regulatory framework is pure fantasy," Witt concluded in his X post, emphasizing the inevitability of eventual legislation regardless of current political dynamics.
Senate Agriculture Committee still needs to finalize its CFTC-focused portions before any unified package can advance to floor votes. Reconciling jurisdictional questions between competing committee drafts remains another hurdle before final passage.
3 Key Takeaways:
Witt warns crypto holdouts that rejecting CLARITY Act risks harsher future Democratic legislation
2026 polls show Democrats leading by 2-5 points, threatening Republican Senate majority crucial for bill
Senate Banking postponed markup vote as industry splits over stablecoin yield and DeFi provisions