Next Week’s Midterms Could Stall the CLARITY Act and Test Crypto’s Political Clout: TD Cowen
Bitcoin Magazine Next Week’s Midterms Could Stall the CLARITY Act and Test Crypto’s Political Clout: TD Cowen TD Cowen says a Democratic sweep would stall the CLARITY Act, while regulators keep adva...
TD Cowen says a Democratic sweep would stall the CLARITY Act, while regulators keep advancing rules that favor the crypto sector.
Washington’s crypto agenda hinges on next week’s midterm elections, according to a new policy note from TD Cowen, shared with Bitcoin Magazine.
Analyst Jaret Seiberg warned in the note that the probable results could make it difficult for Congress to pass the CLARITY Act over the next two years. The bill would set the rules for bitcoin and other digital assets, and the industry has spent $176 million on more than 100 races to shape the outcome. Here are a couple of the results:
Prediction markets cited in the report give Democrats a 90% chance of winning the House and a 62% chance of winning the Senate. TD Cowen considers this the most negative scenario for bitcoin and the broader crypto sector. Under it, Sen. Elizabeth Warren would become Senate Banking Committee chair. Seiberg describes her as a crypto skeptic who has led opposition to the CLARITY Act, and he expects her to conduct tough oversight of federal regulators.
Warren cannot stop regulators from adopting policies that favor the industry. Seiberg expects President Trump to remain favorable toward crypto, so he would veto any bill that limits his regulators’ authority. Democrats would lack the votes to override him. As a result, policy changes are expected to focus on tokenization, perpetual futures, and stablecoins.
The second scenario keeps Democrats in control of the House while key Senate races stay close enough to break for Republicans. Sen. Tim Scott would keep his Banking Committee gavel. TD Cowen views this outcome as a better result for bitcoin, because Rep. Maxine Waters could trade support for parts of the market structure bill in exchange for investor protections and action on her other priorities.
Kalshi gives Republicans a 10% chance to keep the House and a 35% chance to keep the Senate. TD Cowen calls this the best path for crypto policy, though the margins matter. A wider Senate majority would improve the odds that leaders advance the CLARITY Act in 2027 or 2028, and they could attempt a revival during the lame-duck session.
A narrow majority, by contrast, would leave the bill stalled, as Democrats keep pushing ethics provisions that the president opposes. When the Senate blocked the bill, Bitcoin-related stocks tumbled.
For background, the CLARITY Act would create federal rules for digital assets. The House passed its version in July 2025 by a 294-134 vote. The Senate Banking Committee approved its own version in May 2026 by a 15-9 vote, with two Democrats joining Republicans.
On the Senate floor, a cloture vote failed 49-50 on September 15. Democrats want ethics language that would bar senior officials, including the president, from profiting from crypto ventures. Republicans and industry groups resist those limits. Stablecoin yield is another dispute. Each side says the other is blocking progress, and the bill is stuck.
Asanat Analysis — Why it matters
The CLARITY Act represents the crypto sector's most concrete legislative path toward regulatory clarity in the U.S., codifying the treatment of digital assets and limiting SEC overreach. A Democratic midterm sweep would likely shelve the bill, as the current Democratic-controlled Congress has shown limited enthusiasm for crypto-friendly frameworks, instead deferring to regulators like the SEC and CFTC to set policy. This outcome would extend the regulatory ambiguity that has defined the sector for years, forcing crypto firms to navigate inconsistent agency guidance rather than statutory law.
This moment tests whether crypto has built genuine political capital or merely transactional support. The sector has funded both parties and ballot measures, but legislative success requires sustained congressional backing across election cycles. A stalled CLARITY Act wouldn't halt regulatory evolution—agencies will continue interpreting existing law—but it would signal that crypto lacks the voting bloc influence or donor class priority to move major legislation when political control shifts. Conversely, Republican gains could accelerate the bill's passage, making the midterms a genuine inflection point for whether digital assets become a recognized asset class with statutory protections or remain regulatory orphans.