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1. What does the Democratic sweep mean for the CLARITY Act?
Analysts at the investment bank TD Cowen said on November 4 that the Democratic takeover of both chambers of Congress could block the CLARITY Act, the crypto market structure bill, for two years. They added that the result may make any version acceptable to the industry impossible to advance. Washington policy analyst Jaret Seiberg set out the view in a client note issued after the Associated Press called the House and Senate for Democrats.
In the note, Seiberg wrote that the firm views the outcome as negative for the sectors it covers. The assessment turns what had been a question of timing into something more fundamental: not when the legislation might pass, but whether any bill the crypto industry could support is still achievable in this political environment.
The note landed after a difficult stretch for the sector. TD Cowen pointed to the large theft from Binance, the defeat of House allies including Representatives Bryan Steil, Zach Nunn and Ann Wagner, and heavy super PAC spending, reported at more than $170 million, that failed to deliver the Congress the industry had hoped for.
2. Why does Sherrod Brown's return matter to crypto?
Sherrod Brown's return to the Senate from Ohio is central to TD Cowen's reasoning. Industry groups put roughly $64 million into efforts to defeat him, and Seiberg wrote that his comeback damages the sector's political influence. The result shows that large campaign spending did not guarantee the outcome its backers wanted.
Seiberg's remarks build on an earlier TD Cowen note published on Tuesday, before results were known. In that note he said he had not expected the CLARITY Act to pass during the next Congress. The election outcome, in his telling, strengthens that conclusion rather than changing it.
Brown has long been a prominent skeptic of the industry's legislative priorities, and a Democratic majority hands his side control of committee agendas. That affects which bills receive hearings and votes, a power that often matters as much as the final tally on the Senate floor.
3. Where does the CLARITY Act stand now?
The bill already faced a difficult path before the election. In September, the Senate failed to advance it on a procedural cloture vote of 49 to 50, short of the 60 votes needed to proceed. All 49 votes in favor came from Republicans, which underlined how much Democratic support the measure needed.
Under the normal congressional calendar, legislation that has not passed by the end of a session expires with it, which places the bill's fate at the start of January unless the lame-duck session, the period between the election and the new Congress taking office, revives it. TD Cowen listed the lame-duck period among the developments to watch.
Seiberg also argued that Democratic investigations into the crypto ventures of President Donald Trump's family, including World Liberty Financial, may make a crypto-acceptable bill impossible to advance. Democrats who opposed the legislation have said they want conflict-of-interest provisions included before they would support it, and an investigative posture would only harden that demand.
4. What is the CLARITY Act?
The CLARITY Act is the main piece of U.S. legislation meant to set out how digital asset markets are regulated. Its central aim is to divide authority between the SEC and the CFTC, so that companies know which agency oversees a given token, trading venue or intermediary. Supporters in the industry have argued for years that the lack of a clear statutory dividing line forces firms to guess, and that guessing leads to enforcement actions after the fact.
Because most major legislation in the Senate needs 60 votes to move forward, a bill of this kind cannot pass on one party's support alone. That arithmetic is why the September cloture result mattered so much, and why Democratic control of both chambers changes the calculation: the party that withheld its votes now also sets the agenda in each house.
For the industry, the stakes extend beyond market structure. A statute would give rules permanence, while agency guidance can be withdrawn by a future administration. That is the reason many crypto firms pursued legislation even while regulators were becoming friendlier, and it is why a two-year delay carries real costs.
5. Why would investigations make compromise harder?
Seiberg's reasoning ties the bill's prospects to the political fight over the president's own crypto interests. When a party in the majority launches investigations into a sector's most prominent political backers, negotiations over that sector's legislation tend to become entangled with the inquiries.
A bill that appears to benefit companies connected to the president becomes difficult for opponents to support, however much they agree with its technical provisions. Conversely, supporters of the industry may be reluctant to accept limits aimed at those connections. The note suggests this impasse is the reason even a version the industry would accept may be out of reach.
This is also why TD Cowen's framing shifts from timing to feasibility. A delay implies that the same bill returns later; a feasibility problem implies that the bill itself would have to change in ways its backers may not welcome.
6. Will regulators keep pushing ahead without Congress?
Seiberg's answer is yes. He said the election will not change the deregulatory direction of federal agencies, and he expects the Securities and Exchange Commission and the Commodity Futures Trading Commission to stay active on crypto, prediction markets and perpetual futures. He noted that he has repeated this caveat throughout the election cycle.
The two agencies have already moved on several fronts without new legislation, according to the note. They approved perpetual futures tied to bitcoin and to equities, and jointly published a taxonomy for digital assets. Those actions show how much policy can be made through rulemaking and approvals when Congress is gridlocked.
TD Cowen sees a litigation threat to that path rather than an electoral one. A lawsuit by the exchange operator CME Group challenging the approval of perpetual futures is, in Seiberg's view, a bigger risk to agency-led progress than the change in congressional control.
7. What other risks does a divided government create?
The note moves beyond crypto to broader economic questions that could influence bitcoin (BTC). The asset has traded closely with the Nasdaq throughout the autumn, so developments that affect stocks and rates also reach digital assets. Seiberg expects a push to raise the debt ceiling during the lame-duck session but doubts it will succeed, and he expects Democrats to want the vote as leverage next year.
Divided government increases the chance of a shutdown or a default standoff in 2027, according to the note. Such confrontations tend to unsettle financial markets and can lift demand for assets seen as safe, while also pressuring risk assets that investors sell when liquidity tightens.
Seiberg also expects Trump and Senator Elizabeth Warren, whom he described as the likely chair of the Senate Banking Committee, to find common ground on a cap on credit card interest rates. He places the cap closer to 36% than to the 10% Trump has floated, and he said financial technology companies would be more exposed to such a limit than banks.
8. How could confirmations affect the Federal Reserve?
Two items in the note touch the Federal Reserve. Seiberg does not expect Democrats to confirm Trump's nominees to agencies unless the president also fills the seats reserved for Democrats at bodies such as the Federal Deposit Insurance Corporation and the SEC, which he considers unlikely.
The consequence, he suggested, is that the administration may be less inclined to fire Fed Governor Lisa Cook if it cannot count on confirming a replacement. That reasoning links the confirmation process directly to the independence of the central bank, a subject that matters to markets because the Fed's policy choices shape the appetite for risk, including crypto.
9. How could this affect crypto prices and companies?
The note does not offer a price forecast, but it frames the political outcome as one input among several for bitcoin. The asset has moved in step with the Nasdaq this autumn, which means macro developments such as a debt ceiling dispute or a shutdown could matter to crypto holders as much as anything said about the CLARITY Act.
For companies, the practical effect is a longer period of operating without a comprehensive federal statute. Exchanges, token issuers and asset managers will keep working within agency guidance, which has become more permissive but remains easier to change than a law. Firms that plan around the assumption that legislation arrives soon may need to revise those plans.
Investors who follow the sector are likely to pay closer attention to regulatory approvals, court challenges and the pace of agency rulemaking, since these channels now carry most of the policy risk and opportunity. The lawsuit against the perpetual futures approval is the clearest example of how an agency decision can be contested without any vote in Congress.
10. What should investors watch next?
TD Cowen named a short list of developments to follow: the lame-duck session, congressional investigations of Trump, negotiations over the debt ceiling and populist bills such as interest rate caps. Each could shift the legislative landscape for crypto either by consuming floor time or by creating new regulatory pressure.
For the industry, the immediate question is whether a market structure bill can survive in any form beyond the lame-duck period. If not, the next two years would be defined by agency decisions, court rulings and the enforcement priorities of regulators, rather than by a comprehensive statute. Companies planning product launches or listings will have to rely on guidance and approvals that can be reversed or challenged, which raises the importance of legal risk management.