Crypto Regulation Weekly Update: DOJ’s Bitcoin Sale Raises Concerns as U.S. Crypto Laws Encounter Election Challenges

This week’s regulatory updates highlight a recurring situation for the U.S. crypto sector: there is momentum, but a lack of consistency.

From prediction markets and Bitcoin custody issues to election-induced delays in legislation, it seems that policymakers are becoming more cognizant of crypto’s significance, yet they remain sharply divided on how to regulate it. Collectively, these developments indicate a market caught between growth and political stagnation.

Prediction Markets Alert Washington

One of the most politically sensitive stories of the week emerged from Rep. Ritchie Torres, who is drafting legislation to limit how U.S. officials engage in prediction markets.

@RitchieTorres seeks to prohibit officials from trading on prediction markets following a $400K bet on Maduro.
#PredictionMarkets #USPolitics https://t.co/SgGankYd1U

— Cryptonews.com (@cryptonews) January 6, 2026

This initiative comes in the wake of scrutiny surrounding a reportedly profitable wager tied to the abrupt capture of Venezuelan President Nicolás Maduro, which raised alarms about insider access to confidential information.

Torres’ proposed Public Integrity in Financial Prediction Markets Act of 2026 aims to prevent federal officials from trading contracts linked to political or policy outcomes if they have or might reasonably obtain material nonpublic information.

This issue highlights a growing divide in crypto regulation: while decentralized and on-chain markets offer transparency, they also reveal longstanding deficiencies in ethical guidelines for public officials. Prediction markets, once considered niche, are now compelling lawmakers to address conflicts of interest that traditional financial regulations were never intended to tackle.

DOJ Bitcoin Sale Raises Questions of Policy Consistency

In another instance, the U.S. Department of Justice faced backlash after liquidating 57 Bitcoin seized from Samourai Wallet developers, despite an executive order mandating that forfeited Bitcoin should be allocated to the Strategic Bitcoin Reserve instead of being sold off.

The sale, reportedly conducted via Coinbase Prime, has reignited concerns regarding the seriousness with which federal agencies regard Bitcoin’s evolving status as a strategic asset.

If executive orders governing digital assets can be overlooked or misinterpreted at the agency level, it undermines confidence in Washington’s ability to manage crypto policy consistently.

For an industry that is already cautious of enforcement-focused regulation, this incident amplifies worries that internal coordination on crypto remains, at best, inconsistent.

Election Politics Hinder Market Structure Reform

At the legislative front, hopes for a comprehensive crypto market structure bill are once again being challenged. A recent note from TD Cowen cautions that the 2026 midterm elections could postpone the passage of a cohesive regulatory framework until 2027 or beyond.

The 2026 US midterm elections could delay the passage of a significant crypto market structure bill until 2027, warns TD Cowen.#Crypto #Regulation https://t.co/VZA62Cevys

— Cryptonews.com (@cryptonews) January 7, 2026

Senate Banking Committee Chair Tim Scott has now set January 15 as a firm deadline to advance the bill to markup, expressing frustration over months of halted negotiations.

However, political realities are substantial. Some Senate Democrats remain reluctant to push forward with extensive legislation prior to elections, while conflict-of-interest provisions—including those that pertain to senior political figures—continue to complicate discussions.

The risk is evident: as the election countdown progresses, crypto regulation may once again fall prey to partisan maneuvering.

Stablecoins Progress While Policy Lags Behind

In the meantime, developments at the state level, such as Wyoming’s introduction of a state-backed stablecoin, illustrate a growing divide between innovation and federal policymaking.

While states and private entities advance new financial infrastructure, Congress struggles to create a unified framework that could facilitate responsible growth at a national scale.

US community bankers are urging Congress to address what they perceive as a loophole permitting stablecoin rewards.#Crypto #banks https://t.co/2uuk96PfXH

— Cryptonews.com (@cryptonews) January 7, 2026

A Market Outpacing Its Regulators

The common thread connecting these stories is not resistance to crypto, but fragmentation. Lawmakers acknowledge the industry’s significance, yet differ on ethics, custody, enforcement, and timing. The outcome is a regulatory landscape defined more by reaction than by strategy.

As institutional adoption quickens and crypto infrastructure becomes further integrated into the financial system, the costs of delay are increasing. Whether Washington can reconcile its internal divisions before the next election cycle remains uncertain—but the markets are unlikely to pause.

The post Weekly Crypto Regulation Roundup: DOJ Bitcoin Sale Sparks Alarm and U.S. Crypto Laws Face Election Headwinds appeared first on Cryptonews.