1inch lawyer sees agencies driving US crypto regulation as midterms unfold
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Cointelegraph by Felix Ng
As the 2026 US midterm elections unfold, prediction markets are heavily favoring a Democratic sweep despite recent forecasting failures. Meanwhile, industry experts suggest that federal agencies, rather than legislative bodies, will remain the primary drivers of crypto regulation.
The Intersection of Prediction Markets and the 2026 Midterms
As the United States proceeds with the 2026 midterm elections, the role of decentralized prediction markets like Kalshi and Polymarket has moved to the forefront of political discourse. With nearly $1.9 billion in election-related contracts traded as of Monday, these platforms have reached record-breaking levels of activity, reflecting an intense public interest in quantifying political outcomes. Currently, these markets signal a significant advantage for the Democratic Party, pricing a potential sweep of both the House and Senate at approximately 75% to 75.5%.
The Credibility Gap: Lessons from Brazil
Despite the massive volume of capital flowing into these markets, their reliability remains a subject of intense scrutiny. The current pricing, which heavily favors a Democratic victory, comes on the heels of a notable failure in prediction market forecasting during the recent Brazilian runoff elections. This discrepancy highlights the inherent risks in relying on crowd-sourced probabilistic data, as market participants may be subject to herd behavior or algorithmic biases that do not necessarily reflect the nuances of on-the-ground electoral shifts.
Crypto-Backed Candidates and Legislative Stagnation
The 2026 election cycle is particularly notable for its focus on digital assets. With numerous crypto-backed candidates vying for congressional seats, there is significant speculation regarding how these results might impact the future of the CLARITY Act. This legislation, which has faced substantial delays, is seen by many in the industry as a potential vehicle for establishing a clear regulatory framework. However, the current political landscape suggests that even with a shift in congressional control, the path to comprehensive statutory reform remains fraught with difficulty.
The Dominance of Federal Regulatory Agencies
While the election results are highly consequential, Maylea Ma, deputy general counsel at 1inch, argues that the most significant developments in digital asset policy will likely originate from executive agencies rather than the legislative branch. Entities such as the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Treasury Department are expected to continue driving the regulatory agenda. This shift emphasizes a 'regulation by enforcement' approach that has become characteristic of the current US crypto environment.
The Search for Long-Term Stability
Industry participants remain caught in a cycle of regulatory uncertainty. While increased engagement between federal agencies and crypto projects is a positive development, it fails to provide the long-term stability that a formalized statute would offer. As Ma noted, the ultimate goal of the industry is to secure a legislative framework that is resilient enough to withstand changes in government administration. Without such a statute, the regulatory environment for digital assets will likely remain volatile and susceptible to reversal.
Future Trends and Concluding Summary
Looking ahead, the tension between market-driven speculation and actual legislative progress will define the post-election landscape. Regardless of which party secures the majority, the reliance on agency-led regulation suggests that the crypto industry will continue to operate in a high-pressure environment defined by ongoing legal and administrative scrutiny. The 2026 midterms serve as a critical juncture, but the true evolution of crypto policy will be found in the halls of federal agencies rather than through the outcomes of individual congressional races.
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