The upcoming midterm elections in the United States could significantly impact the future of the CLARITY Act, a bill designed to establish federal regulations for digital assets. According to a policy note from TD Cowen, the legislative outcome depends on which party secures control of Congress. The crypto industry has invested $176 million across more than 100 political races to influence this process.
TD Cowen analysts suggest that a Democratic victory in both the House and Senate represents the most challenging scenario for the sector. Under this outcome, Senator Elizabeth Warren would likely chair the Senate Banking Committee, potentially leading to increased oversight. However, analysts note that President Trump would likely veto restrictive legislation, and Democrats would lack the necessary votes to override such a decision.
An alternative scenario involves Republicans maintaining control or narrowing the margins in the Senate, which TD Cowen views as more favorable for the industry. In this case, Senator Tim Scott would retain his position as chair of the Banking Committee. A wider Republican majority could increase the probability of advancing the CLARITY Act during the 2027 or 2028 sessions.
The CLARITY Act has faced significant legislative hurdles, including a failed cloture vote in the Senate on September 15 with a 49-50 result. Disagreements persist regarding ethics provisions that would restrict senior officials from profiting from crypto ventures, as well as debates over stablecoin yields. Previously, the House passed its version of the bill in July 2025 by a 294-134 vote.
