TD Cowen Sees 2-Year CLARITY Act Delay if Democrats Sweep Congress

CLARITY Act Faces a Two-Year Delay

A Democratic sweep of both chambers in Tuesday's US midterm elections would delay passage of the CLARITY Act by as much as two years, according to the Washington research group at investment bank TD Cowen. Voting opened on 2026-11-03 local time, and control of Congress has emerged as the decisive variable for digital asset market-structure legislation. In a report circulated before election day, TD Cowen managing director Jarrett Seiberg wrote that Democratic majorities in the House and Senate would make the bill significantly harder to move. The CLARITY Act sets out a federal framework for digital assets and draws a firmer line between the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) over which tokens and venues each supervises. The House cleared the bill in July 2025 by 294 votes to 134, but Senate progress has stalled: a cloture vote on September 15 failed 49 to 50, well short of the 60 needed to open debate. Negotiations have also snagged on conflict-of-interest rules for public officials, a Democratic demand aimed at digital asset ventures linked to President Donald Trump. Prediction markets price a Democratic resurgence heavily. Kalshi showed a 94% probability of a House majority and 76% for the Senate as of Monday, while figures TD Cowen cited in late October put the odds at 90% and 62%. The industry has not watched from the sidelines: political spending across more than 100 midterm races reached roughly $176 million. Not everyone sees the outcome as decisive. In an October 28 report, Grayscale research head Zach Pandl argued the sector is bipartisan, global and increasingly tied into institutional finance, and would keep developing regardless of the midterm result.

60 Votes and a Veto Pen

The arithmetic behind the delay warning is straightforward. Democrats need a net gain of four seats to take the Senate, where Republicans hold 53 seats against 47 Democratic-aligned seats; the House sits at 218 Republicans to 214 Democrats. A Senate majority alone would not revive the bill, because every procedural step requires 60 votes. The current Congress runs through January 3, 2027, and traders on Polymarket cut the probability of year-end passage to 6.5% after the September cloture defeat. President Trump said on October 23 that he would veto every bill if Democrats retake Congress, and an override requires two-thirds of both chambers, 290 House votes and 67 Senate votes, which Seiberg does not believe the opposition can muster. If negotiations restart next year, the friction points are known: ethics rules covering digital asset businesses tied to senior officials and the president's family, and limits on stablecoin rewards that banks have resisted over deposit competition. One framework is already locked in, as the GENIUS Act for payment stablecoins takes effect around January 18, 2027, while SEC and CFTC rulemaking proceeds separately, though Democrats could try to void agency rules under the Congressional Review Act. Hearings may reach stablecoin reserve practices at issuers such as Circle, political funding by industry groups such as Fairshake, and exchange security after the October 30 breach at Binance that on-chain investigators tied with high confidence to the North Korea-linked TraderTraitor group, a finding the FBI has also endorsed. CFTC Chair Michael Selig said the incident supports the market rules his agency proposed in October, including an option for overseas exchanges to register with the CFTC. Senator Cynthia Lummis has argued the breach proves the need for the CLARITY Act's requirement that exchanges segregate customer assets with qualified custodians such as Coinbase Global. In a House-only Democratic win, TD Cowen sees Maxine Waters as a possible partial ally on investor-protection terms, a softer outcome than full Democratic control.

A Two-Year Jurisdiction Gap

VanEck digital assets research head Matthew Sigel has argued a Democratic win would not damage Bitcoin, noting the prior administration was not bad for the asset, while tokens beyond it depend far more on market-structure rules covering DEX trading, exchange operations and stablecoin rewards. Our reading is similar on direction but tighter on timing. With the veto pen and the 60-vote threshold both working against adverse legislation, the realistic downside is not new restrictive law but a two-year stretch in which the SEC and CFTC jurisdiction question stays unanswered, leaving venues and issuers to operate on enforcement discretion. The actionable signals are committee gavels and hearing calendars, not the election night map itself.