Democrats' victory in the 2026 midterm elections is likely to reset the political calculus for cryptocurrency regulation in Washington, with analysts saying the Clarity Act is unlikely to advance and that Democrats are likely to scrutinize President Donald Trump's personal crypto dealings.
The shift followed Trump's 2024 election win, which gave the industry a reprieve and a seat at the policy table after years of seeking clear operating rules and often being on the receiving end of regulation by enforcement.
Jaret Seiberg, TD Cowen's Washington analyst, said in a note that he saw Brown's win in Ohio as damaging to the crypto industry's political clout as the industry had worked to defeat him. Seiberg said he did not think the Clarity Act could advance over the next two years, and that the resulting political environment may make it impossible to advance a version of the bill the crypto sector could back.
Mike Townsend, Charles Schwab's managing director of legislative and regulatory affairs, said he expects "Democrats to push next year for a version of the bill that is much tougher on cryptocurrency companies."
The industry spent more than $200 million on the midterms. As of Thursday morning, the advocacy nonprofit Stand With Crypto said 19 Senate candidates it characterizes as pro-crypto had been elected versus eight it deems anti-crypto; in the House, 228 pro-crypto candidates had been elected versus 106 the group deems anti-crypto. According to Reuters, the super PAC Fairshake had so far won 29 of the 34 races it spent on.
Coinbase's vice president of U.S. policy, Kara Calvert, noted a historic shift in congressional makeup. "With last night's results, the 120th Congress is on track to have more new pro-crypto members than we've ever seen in any freshman class," she said. "Crypto is 100% bipartisan, and that's why the future of finance does not rest on either political party or a single election night."
Dante Disparte, chief strategy officer at Circle, said it may take longer to get the Clarity Act tabled again. Joseph Chalom, CEO of Sharplink, said he expects the act to remain on hold through 2028 but sees a path for stablecoins and the tokenization of public equities under the SEC's five-year innovation exemption. "Technological progress is rarely rolled back," he said.
James Butterfill, head of research at CoinShares, said the political impact should vary across assets. "We would expect U.S. crypto equities to be more sensitive than bitcoin, particularly businesses reliant on new regulatory permissions," he said, adding that established, compliant operators could benefit from greater scrutiny of competitors.
Analysis
Why This Matters
- The stalled Clarity Act leaves the U.S. without comprehensive crypto market structure rules, potentially ceding innovation to other jurisdictions.
- Increased congressional scrutiny of Trump's crypto dealings could create regulatory uncertainty and market volatility.
- The outcome shows the crypto industry's political strategy, spending heavily on elections, has limits when the partisan balance shifts.
Background
The crypto industry sought clear operating rules in Washington for years but often faced enforcement-driven regulation. That changed after Trump's 2024 election, which gave the industry a reprieve and a seat at the policy table. The Clarity Act, a bipartisan bill aimed at providing a market structure for digital assets, stalled in the Senate. The 2026 Democratic sweep has now reversed the industry's political fortunes, with critics like Sherrod Brown returning to the Senate and Sen. Elizabeth Warren retaining influence over financial policy.
Key Perspectives
Jaret Seiberg (TD Cowen): Sees Sherrod Brown's win as damaging the industry's political clout and expects the Clarity Act to stall through 2028. Democrats will investigate Trump's crypto entanglements, he added.
Mike Townsend (Charles Schwab): Expects Democrats to push for a tougher version of crypto legislation next year.
Kara Calvert (Coinbase): Points to a record number of pro-crypto freshmen in Congress and insists crypto is 100% bipartisan, meaning industry progress does not rest on one party.
Dante Disparte (Circle): Says Clarity may take longer to table but maintains a bipartisan approach.
Joseph Chalom (Sharplink): Expects the Clarity Act to remain on hold through 2028 but sees a path for stablecoins and tokenization under existing SEC exemptions.
James Butterfill (CoinShares): Predicts varying impact across assets, with U.S. crypto equities most sensitive to regulatory changes, while established miners could benefit from scrutiny of competitors.
What to Watch
- The makeup of Senate Banking Committee leadership and its agenda on crypto oversight.
- Whether the SEC's five-year innovation exemption is used for tokenization of equities.
- The outcome of uncalled House races and the final pro-crypto count in the 120th Congress.
Checked
12 claims in this story checked against 1 source: 12 supported.
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- SupportedThe Democratic sweep is likely to push crypto legislation such as the Clarity Act to the back burner.Tech: “Democrats' sweep of Congress likely resets the political calculus for crypto, ushering in a more adversarial approach in Washington and pushing industry-friendly legislation like the Clarity Act to the back burner.”
- SupportedThe Clarity Act may remain stalled.Tech: “Even with the CLARITY Act potentially stalled until 2028, key financial regulators can help advance the industry through rule-making.”
- SupportedAnalysts expect a Democratic Congress to scrutinize President Trump's personal crypto dealings.Tech: “analysts say the new Congress is likely to focus on scrutinizing President Donald Trump's personal crypto dealings over supportive industry legislation.”
- SupportedTownsend said, “Democrats to push next year for a version of the bill that is much tougher on cryptocurrency companies.”Tech: “Mike Townsend, Charles Schwab's managing director of legislative and regulatory affairs, said he expects "Democrats to push next year for a version of the bill that is much tougher on cryptocurrency companies."”
- SupportedCalvert said, “With last night's results, the 120th Congress is on track to have more new pro-crypto members than we've ever seen in any freshman class.”Tech: “"With last night's results, the 120th Congress is on track to have more new pro-crypto members than we've ever seen in any freshman class," she said.”
- SupportedChalom expects the Clarity Act to remain on hold through 2028.Tech: “"We expect the Clarity Act to remain on hold through 2028. Even so, there is a clear path forward for stablecoins … and for the tokenization of public equities under the SEC's five-year innovation exemption," he said.”
- SupportedChalom said there is a path for stablecoins and tokenization of public equities under the SEC's five-year innovation exemption.Tech: “"We expect the Clarity Act to remain on hold through 2028. Even so, there is a clear path forward for stablecoins … and for the tokenization of public equities under the SEC's five-year innovation exemption," he said.”
- SupportedButterfill said U.S. crypto equities would be more sensitive than bitcoin, particularly businesses reliant on new regulatory permissions.Tech: “"We would expect U.S. crypto equities to be more sensitive than bitcoin, particularly businesses reliant on new regulatory permissions.”
- SupportedThe industry spent more than $200 million on the midterms.Tech: “The crypto industry spent more than $200 million to sway the midterms”
- SupportedStand With Crypto counted 19 pro-crypto and eight anti-crypto Senate candidates elected as of Thursday morning.Tech: “As of Thursday morning, 19 candidates characterized as pro crypto by the advocacy nonprofit Stand With Crypto have been elected to the Senate versus eight Senate candidates it characterizes as anti crypto.”
- SupportedStand With Crypto counted 228 pro-crypto and 106 anti-crypto House candidates elected as of Thursday morning.Tech: “In the House, 228 pro crypto candidates have been elected versus 106 the group deems anti- crypto.”
- SupportedFairshake had won 29 of the 34 races it spent on, according to Reuters.Tech: “Fairshake – the super PAC launched in 2023 to support pro-crypto candidates regardless of party – has so far won 29 of the 34 races it spent on, per Reuters,”
