Key Highlights
- McHenry warned that language used by Waters could signal legislation harmful to cryptocurrency firms.
- McHenry acknowledged that separating stablecoin rules from the CLARITY Act weakened the bill’s path to passage.
- Despite his concerns, McHenry said on November 9, 2026, that an anti-crypto bill would likely fail in the incoming Democratic House.
McHenry Warns of Potentially Harmful Crypto Legislation
McHenry rejected the more optimistic interpretation of Waters’s language, arguing that it could signal legislation harmful to cryptocurrency companies. His concerns focus on the direction of upcoming crypto policy and the potential impact of stronger regulatory and consumer-protection requirements on firms operating in the sector.
Waters’s record provides a basis for those concerns. In 2025, she introduced the Crypto Investor and Consumer Bill of Rights, a proposal focused on strengthening protections for digital-asset users. An amendment she offered that year included two significant requirements: cryptocurrency firms would have to provide monthly proof of reserves, and customers would have the right to make withdrawals within 24 hours.
McHenry Admits Error Over the CLARITY Act
McHenry also accepted responsibility for a strategic decision that he now believes delayed crypto legislation. On November 7, 2026, the former chair said he made a mistake while advancing the Digital Asset Market Clarity Act, commonly known as the CLARITY Act.
His mistake, by his own assessment, was separating stablecoin regulations from the broader market-structure legislation. McHenry said the decision slowed the bill’s progress toward passage and took full ownership of the error.
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Keeping stablecoin provisions and market-structure rules together could have allowed both issues to advance as one legislative package. Once separated, the market-structure provisions had to move independently and did not reach the finish line before the political environment changed.
McHenry Sees Limits to Anti-Crypto Legislation
McHenry’s warnings do not amount to a prediction of a crypto-policy collapse in Congress. On November 9, 2026, he said an anti-crypto bill would likely fail in the incoming Democratic House.
His assessment is based on the bipartisan coalition that has developed around the cryptocurrency industry. McHenry argued that cross-party support for pro-crypto legislation is stronger than it has ever been, creating enough cooperation to block legislation that is openly hostile to the sector.
At the same time, House Democrats are reportedly developing their own market-structure framework. The proposal is expected to draw on parts of Waters’s earlier initiatives, including the consumer-focused Crypto Investor and Consumer Bill of Rights. The framework may also seek to clarify or rebalance regulatory oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission.
Why This Matters
The competing approaches highlight the central debate over U.S. cryptocurrency regulation: how to establish stronger consumer safeguards without creating rules that the industry views as excessively restrictive. The future of market-structure legislation may depend on whether lawmakers can combine oversight of digital-asset markets with requirements addressing reserves, withdrawals, and agency responsibilities.
McHenry’s comments also underscore the importance of legislative strategy. His account of the CLARITY Act suggests that decisions about whether to combine or separate stablecoin and market-structure provisions can materially affect a bill’s prospects, particularly when political control and congressional priorities change.
Frequently Asked Questions
What did McHenry criticize about Waters’s approach?
McHenry interpreted Waters’s language as a warning that upcoming legislation could be harmful to cryptocurrency firms. He pointed to Waters’s 2025 Crypto Investor and Consumer Bill of Rights and an amendment requiring monthly proof of reserves and 24-hour customer withdrawals.
What mistake did McHenry acknowledge regarding the CLARITY Act?
McHenry said he was wrong to separate stablecoin rules from the broader market-structure legislation. He believes the decision slowed the bill’s progress and left the market-structure provisions unable to pass before political conditions shifted.
What crypto legislation are House Democrats reportedly developing?
House Democrats are reportedly working on a market-structure framework that could incorporate elements of Waters’s earlier proposals, including the Crypto Investor and Consumer Bill of Rights. The framework may also address the division of regulatory oversight between the SEC and the CFTC.
