Democrats Claim Senate Control, Putting CLARITY Act Back in Play

By Tom Whitfield

Democrats claimed control of the U.S. Senate with 51 seats after Democratic Senator Josh Turek won Iowa’s Senate race, according to the Associated Press. The party flipped Republican-held seats in Texas, Ohio, North Carolina, South Carolina, Kansas and Iowa; Democrats and independents who caucus with them now hold 51 seats.

What does the Senate majority change for the CLARITY Act?

The new majority could change the route for the stalled CLARITY Act and the leadership of committees overseeing crypto. It could also bring closer congressional scrutiny of Trump-linked crypto businesses, regulators’ decisions and nominees for future regulatory posts.

Jerome de Tychey, president of Ethereum France and co-founder of EthCC, said it was too early to determine the precise effect on crypto. His conclusion was that legislation would need cross-partisan support, making the majority’s practical value dependent on votes from the other party.

De Tychey framed the bill’s timetable this way:

“The CLARITY Act failed its Senate procedural vote 49 to 50 in September, and if it isn’t passed by January, the next Congress starts again from scratch. So the industry will have to go back to the table and make the case for blockchain again, on substance.”

The timetable leaves the industry with two paths before January. Passage would preserve the current effort; failure would require the next Congress to start again from scratch.

How will committee control affect oversight?

Control of the Senate determines which lawmakers lead committees overseeing the industry. The shift can affect three parts of the policy process:

• Committee leadership: The majority determines which lawmakers lead committees with jurisdiction over crypto.
• Business scrutiny: Democrats could bring closer congressional review of Trump-linked crypto businesses and regulators’ decisions.
• Regulatory appointments: The majority also affects confirmation of future presidential nominees for regulatory posts.

The 51-seat majority can change who conducts oversight and which nominees advance. It does not, however, remove the need for bipartisan votes.

Which regulatory demands could gain traction?

De Tychey said some Democratic demands could strengthen the industry’s regulatory framework. He described conflict-of-interest rules and customer-protection obligations as appropriate for a mature industry, and noted that Europe already operates under the European Union’s Markets in Crypto-Assets regulation, or MiCA.

What is the risk of a partisan crypto policy?

De Tychey warned that the biggest risk for crypto in America was its entrenchment as a partisan issue. A party-aligned policy could set the United States back several years, he said, because durable outcomes still depend on legislators from both parties.

The warning places the election result in a narrower context. A 51-seat majority may change committee leadership and oversight, but it cannot remove the need for cross-party agreement.

Fred Hsu, co-founder and CEO of D3, a core contributor to Doma Protocol, argued that durable regulation requires support from both parties. In comments provided ahead of the election, he said:

“The midterms are a good reminder that the industry can’t rely on one party to deliver them, and should be making its case to lawmakers on both sides now.”

Hsu’s advice is operational: the industry should make its case to lawmakers on both sides now, rather than wait for one party to deliver regulation. His reference to the midterms makes the election a preparation deadline, while the CLARITY Act timetable still points to January.

What must happen by January?

January is the next stated milestone for the CLARITY Act. A 51-seat majority can determine committee leadership and confirmation outcomes, but de Tychey’s warning leaves the legislation dependent on bipartisan support. If lawmakers do not pass it by January, the next Congress will start again from scratch.