Midterms Could Stall CLARITY Act as Democrats Near House Takeover: TD Cowen

Next week's midterm elections will likely stall the CLARITY Act for the remainder of this Congress, according to a policy note from TD Cowen shared with Bitcoin Magazine. Analyst Jaret Seiberg writes that the most probable electoral outcomes make it difficult for lawmakers to pass the digital asset market structure bill over the next two years, despite an industry that has spent $176 million across more than 100 races to shape the result.

The stakes are concrete. The CLARITY Act would establish the first federal regulatory framework for bitcoin and other digital assets. The House passed its version in July 2025 by a vote of 294-134. The Senate Banking Committee approved its own text in May 2026, 15-9, with two Democrats joining Republicans. On the Senate floor, a cloture vote failed 49-50 on September 15, and the bill has been stuck since.

TD Cowen lays out three scenarios, each with distinct consequences for market structure legislation.

What does a Democratic sweep change?

Prediction markets cited in the note give Democrats a 90% chance of taking the House and a 62% chance of taking the Senate. TD Cowen considers full Democratic control the most negative scenario for the sector. Senator Elizabeth Warren, described by Seiberg as a crypto skeptic who has led opposition to the CLARITY Act, would chair the Senate Banking Committee and conduct tough oversight of federal regulators.

Even so, Warren could not simply unwind favorable rules. Seiberg expects President Trump to remain supportive of crypto and to veto any bill that limits his regulators' authority. Democrats would lack the votes to override him. Under this scenario, policy change would shift from legislation to regulators themselves, concentrating on tokenization, perpetual futures and stablecoins.

What if Congress stays split?

The second scenario keeps Republicans in control of the Senate while Democrats hold the House. Senator Tim Scott would retain the Banking Committee gavel. TD Cowen views this as a better outcome for bitcoin, because Representative Maxine Waters could trade support for parts of the market structure bill in exchange for investor protections and movement on her other priorities.

In this configuration, adverse legislation would be blocked from reaching the president's desk. The bill itself would remain in play, even if progress stays slow.

Why a Republican sweep matters most

Kalshi gives Republicans a 10% chance of keeping the House and a 35% chance of keeping the Senate. TD Cowen calls a Republican sweep the best path for crypto policy, though margins determine everything. A wider Senate majority would improve the odds of leaders advancing the CLARITY Act in 2027 or 2028, and could permit an attempt at revival during the lame-duck session.

A narrow majority would leave the bill stalled. Democrats continue to push ethics provisions that the president opposes, and when the Senate blocked the bill in September, bitcoin-related stocks tumbled.

The remaining disputes are specific. Democrats want ethics language barring senior officials, including the president, from profiting from crypto ventures. Republicans and industry groups resist those limits. Stablecoin yield provisions remain a second flashpoint. Each side blames the other for the impasse.

What does this change for practitioners? Under the most likely outcome, the market structure framework moves out of Congress and into the agencies, which means tokenization, perpetual futures and stablecoin rules advance through regulation rather than statute, with Warren-led Senate oversight as the new compliance risk. The clock runs through election night.