Democratic Sweep of Congress Leaves Clarity Act Dead Despite $170.5M Crypto Spend

Midterm Sweep Sinks Clarity Act

Democrats' sweep of both chambers of Congress in Tuesday's U.S. midterm elections has left the crypto industry's flagship legislative effort in serious doubt. The Clarity Act, a market structure bill meant to settle how spot, derivatives and OTC trading are regulated, already failed to advance in September even with Republicans controlling the Senate and the House, and industry figures now say the bill in its current form is finished.

Mati Greenspan, founder of Quantum Economics, called the result “the final nail in the Clarity Act's coffin,” pointing out that the bill could not clear a procedural vote in September when the industry's allies ran both chambers. Stefan Muehlbauer, head of U.S. government affairs at blockchain security firm CertiK, said the Clarity Act is likely dead in the water in its current form.

The spending behind that effort was heavy. Crypto political action groups deployed roughly $170.5 million on the elections, according to figures Anton Golub, head of exchange go-to-market at Forte, shared with our desk, and at least $125.5 million of it flowed to Republicans. One unresolved fight has been stablecoin rewards, with banks opposing any provision that lets exchanges pay customers yield on dollar-backed tokens for fear deposits would drain from traditional accounts. Golub argued Republicans never settled that dispute while they held power.

Trading products are still expanding regardless. On Tuesday the Commodity Futures Trading Commission (CFTC) moved to allow single-stock perpetual futures on qualifying U.S. exchanges, though a federal judge indicated the same day that such products might not be permissible under the agency's rules. Perpetual futures are the most actively traded class of crypto futures, contracts that let traders bet on prices without owning the asset or closing positions on a fixed date. Golub expects the format to spread well beyond crypto into equities and other markets.

TD Cowen Sees Two-Year Freeze

TD Cowen put a number on the damage: two years. In a note to clients after both chambers were called on election night, Washington analyst Jaret Seiberg wrote that the outcome is “negative for our sectors” and closes the door on market structure legislation like the Clarity Act through the next Congress. His standing caveat holds, however: the election “will not impact the ability of regulators to push their de-regulatory agendas,” and he expects the U.S. Securities and Exchange Commission (SEC) and the CFTC to stay active on crypto, prediction markets and perpetuals.

Seiberg's crypto calls build on a note published Tuesday before the results. Sherrod Brown's return to the Senate from Ohio, after about $64 million in industry money went into trying to stop him, “damages the crypto industry's political clout,” he wrote, adding that Brown's win made him more confident the bill would not pass. The arithmetic is stark: the Clarity Act passed the House in July 2025 and failed a Senate cloture vote 49-50 in September, and it dies on Jan. 3 unless the lame-duck session revives it. Seiberg goes further, warning that Democratic investigations of the Trump family's crypto ventures, including World Liberty Financial, “may make it impossible to advance a version of Clarity that the crypto sector could back.”

The note lands after a bruising stretch: a record $6.34 billion hack of Binance, the loss of House allies Bryan Steil, Zach Nunn and Ann Wagner, and more than $170 million in super PAC spending that delivered no friendly Congress. Muehlbauer expects Democratic scrutiny to run through hearings and investigations into money laundering, an area where crypto mixers are a recurring enforcement target, along with cybersecurity and consumer protection. Seiberg's watchlist adds a lame-duck debt ceiling fight, confirmation battles and a possible interest rate cap closer to 36% than the 10% President Trump has floated, with Sen. Elizabeth Warren the likely Senate Banking chair.

The practical read is that the agency route is now the only live path, and it does not depend on Congress. The SEC and the CFTC have already cleared bitcoin perpetuals, equity perps and a joint crypto taxonomy this year, and Seiberg identifies the CME lawsuit over the perps approval, not the election, as the real threat to that agenda. That shifts the burden onto regulators and courts through 2027, with investigations of Trump-linked ventures adding political risk on top. For an asset class that has traded in step with the Nasdaq all autumn, a two-year legislative freeze plus a deeper probe of the sector's largest political patron reads as a bear market setup for crypto-exposed equities, whatever the bill's eventual fate.