The future of the CLARITY Act, a proposed federal framework for digital assets, may depend heavily on next week’s US midterm elections. TD Cowen analyst Jaret Seiberg says the likely election outcomes could either delay the legislation or improve its chances of advancing in Congress over the next two years.
The crypto industry has spent $176 million across more than 100 races, according to the policy note shared with Bitcoin Magazine. That spending reflects the importance of the elections for an industry seeking clearer rules for bitcoin and other digital assets.
A Democratic sweep would create the biggest obstacle
Prediction markets cited by TD Cowen assign Democrats a 90% probability of winning the House of Representatives and a 62% probability of taking the Senate. The firm describes a Democratic sweep as the most unfavorable result for bitcoin and the wider crypto market.
Under that scenario, Senator Elizabeth Warren would become chair of the Senate Banking Committee. Seiberg characterizes Warren as a crypto skeptic and says she has led opposition to the CLARITY Act. From the committee chair, she would also be positioned to conduct close oversight of federal financial regulators.
The change in congressional leadership would not necessarily prevent regulators from pursuing policies that are viewed as supportive of the crypto sector. TD Cowen expects President Trump to remain favorable toward cryptocurrency and says he would veto legislation that restricts the authority of his regulators. Democrats would not have enough votes to override such a veto.
As a result, the firm expects policy progress in areas such as tokenization, perpetual futures and stablecoins, even if Congress cannot agree on the broader market-structure bill. The likely outcome would therefore be a divided policy landscape: regulatory action could continue while legislation establishing a comprehensive framework remains stalled.
Split control offers a different route
TD Cowen’s second scenario is a Democratic-controlled House combined with a Republican Senate. In this outcome, Senator Tim Scott would retain the chairmanship of the Banking Committee. The firm considers that arrangement more favorable for bitcoin than a full Democratic victory.
Representative Maxine Waters could potentially support parts of a market-structure bill in return for investor-protection measures and action on other priorities, according to Seiberg’s assessment. A Republican Senate would also block legislation considered adverse to the industry from reaching the president’s desk.
A Republican sweep is considered the least likely scenario but the most favorable for crypto policy. Kalshi gives Republicans a 10% chance of holding the House and a 35% chance of retaining the Senate. TD Cowen says the size of the Republican Senate majority would be important. A wider majority could improve the chances of advancing the CLARITY Act in 2027 or 2028, or of reviving it during the lame-duck session.
A narrow majority would be less decisive. Democrats would continue pressing for ethics provisions that would prevent senior officials, including the president, from profiting from crypto ventures. Republicans and crypto industry groups oppose those restrictions. The two sides also remain divided over stablecoin yield.
Why the CLARITY Act is stalled
The CLARITY Act is intended to establish federal rules for digital assets, including the responsibilities of financial regulators. The House approved its version in July 2025 by a 294-134 vote. The Senate Banking Committee later approved its own version in May 2026, with a 15-9 vote that included support from two Democrats.
The legislation then failed to clear a Senate cloture vote on September 15, which ended 49-50. Cloture is the procedural vote generally used to advance a bill toward a final Senate vote. The failed vote exposed the central political dispute: Democrats want ethics language targeting crypto-related profits by senior officials, while Republicans and industry participants resist those limits.
The disagreement over stablecoin yield has added another unresolved issue. With both parties accusing the other of blocking progress, the bill remains stuck despite its earlier movement through the House and Senate committee process.
The election could therefore affect more than the bill’s immediate prospects. It will determine who controls the committees that shape financial legislation, how aggressively regulators are scrutinized and whether lawmakers can assemble a coalition around market-structure rules. The previous Senate setback also showed how quickly crypto-linked assets can react to legislative disappointment: Bitcoin-related stocks fell when the chamber blocked the bill.
Moneyiar market picture
Moneyiar data as of October 25, 2026, at 22:39 +03:30, showed Bitcoin at $80,430.506808014, down 0.08% over 24 hours and 1.32% over seven days.
Polygon’s former MATIC token, now listed as POL, stood at $0.0898082186, up 0.39% in 24 hours but down 0.74% over seven days. Lighter was priced at $3.1819342396, down 1.45% over 24 hours and up 5.12% over seven days. Moneyiar did not provide a current price for the Polygon asset listed under the MATIC symbol.
