A Democratic sweep of Congress and the return of Senator Sherrod Brown to the Senate Banking Committee will likely block the CLARITY Act for the next two years, according to TD Cowen analysts. The firm stated in a client note that this political shift may render any version of crypto market structure legislation supported by the industry impossible to advance.
Legislative Outlook Shifts
The CLARITY Act, which passed the House in July 2025 but failed a Senate cloture vote with a 49-50 split in September, is now effectively stalled. Unless revived during the lame-duck session, the bill dies on January 3. TD Cowen Washington analyst Jaret Seiberg wrote that the election outcome closes the door on such legislation for the foreseeable future.
Seiberg noted that Democratic investigations into President Trump’s family crypto ventures, including World Liberty Financial, further complicate the landscape. These probes may make it impossible to advance a version of the Clarity framework that the crypto sector could back, as partisan tensions rise over alleged conflicts of interest.
Industry Political Influence Wanes
The election results also signaled a reduction in the crypto industry’s political clout. Senator Brown returned to the Senate from Ohio despite approximately $64 million in industry spending aimed at defeating him. Seiberg wrote that this outcome damages the sector’s influence, particularly after losing key House allies such as Bryan Steil, Zach Nunn, and Ann Wagner.
The political defeat occurred alongside more than $170 million in super PAC spending that failed to secure the desired congressional composition. Additionally, the week preceding the analysis saw a record $6.34 billion hack targeting Binance, adding operational stress to the sector’s political setbacks.
Regulatory Activity Continues
Despite the legislative freeze, TD Cowen expects federal regulators to remain active. Seiberg stated that the election results will not impact the ability of agencies to push their deregulatory agendas. The Securities and Exchange Commission and the Commodity Futures Trading Commission are expected to continue overseeing crypto, prediction markets, and perpetual contracts.
The SEC and CFTC have already cleared bitcoin perpetuals, equity perps, and a joint crypto taxonomy this year without congressional action. Seiberg sees no immediate change in this trajectory, as these agencies operate independently of the new congressional makeup.
Looking ahead, Seiberg anticipates potential common ground between Trump and Senator Elizabeth Warren, the likely Senate Banking chair, on an interest rate cap. He projects a cap closer to 36 percent rather than the 10 percent Trump has previously floated, which would expose fintechs more than traditional banks. However, he doubts Democrats will confirm Trump nominees unless the president fills Democratic seats at agencies such as the FDIC and SEC, a scenario he considers unlikely.
