According to an election-day note sent to clients and Bitcoin Magazine by TD Cowen Washington analyst Jaret Seiberg, a Democratic sweep of Congress would eliminate any chance of the CLARITY Act passing over the next two years and would worsen the political climate for digital assets.
Seiberg noted that TD Cowen aligns with prediction markets and polls indicating that Democrats are positioned to capture both chambers, though he added the caveat that polls conducted a month prior, which showed tighter races, typically outperform those taken right before an election.
His outlook for the industry is straightforward: “Democrats will likely investigate Trump including his crypto entanglements. We see this as souring the political environment for crypto, which is why we do not expect the Clarity Act to pass over the next two years.”
The market structure legislation previously cleared the House by a vote of 294-134 in July 2025, but it failed a Senate cloture vote of 49-50 on September 15. The bill will officially expire and need to be reintroduced if it does not pass before the new Congress is sworn in on January 3.
Seiberg also mentioned that the political influence of the crypto sector within Congress could diminish further if Sherrod Brown wins his Senate race in Ohio—a contest where the industry poured funds into trying to defeat him.
In Congress, the Senate is the lever
The analysis emphasizes that controlling the Senate is the primary objective. A Democratic majority could block nominees put forward by Trump and leverage that authority to compel him to appoint Democrats to open seats on the SEC, FDIC, and CFTC—the three regulatory bodies driving digital asset policy.
Furthermore, it could pressure the White House to abandon its efforts to oust Lisa Cook from the Federal Reserve board of governors. While Trump could respond by appointing acting agency heads, Seiberg pointed out that this approach risks transferring authority to career personnel, an outcome that “Team Trump” wants to avoid.
A Senate majority would position Senator Elizabeth Warren as the chair of the Banking Committee. Seiberg believes this could open the door for populist economic proposals such as interest rate caps, restrictions on bank stock buybacks, and a government-backed credit score, adding that Warren and Trump might find common ground on several of these measures.
Meanwhile, Representative Maxine Waters would take over the House Financial Services Committee, directing her attention toward housing policy and increased oversight of the FHFA.
“That means a focus on housing though we are dubious that she will find GOP support for down payment help and public housing renovations. FHFA scrutiny will increase,” according to the note.
For traditional banks, the update indicates the election will change little, as regulators from either party are expected to continue relaxing tiering, liquidity, and capital standards. However, a divided government increases the likelihood of a debt-ceiling crisis or a government shutdown, given that Trump is anticipated to reject the spending conditions that Democrats may demand.
Bitcoin on election day
During Tuesday afternoon Eastern Time, Bitcoin traded near $77,500, recovering from a morning low of $76,300, though still about $2,000 below its opening price for the month. This price action comes in the wake of a record $6.34 billion Binance hack, consecutive days of outflows from spot exchange-traded funds, and a Federal Reserve leaning toward an interest rate hike in December.
With Kalshi prediction markets assigning a 74% probability to a Democratic Senate and a 94% chance to a Democratic House, Seiberg noted that much of this outlook is already factored into the market price.
However, the lame-duck session remains an unpriced variable. Senator Angela Alsobrooks, who has been involved in negotiating the CLARITY Act, has suggested the legislation could still be approved prior to January, even if a Democratic-led Congress would not prioritize it afterwards. Nonetheless, she cautioned that if the bill fails during this timeframe, a future Democratic Congress is unlikely to make it a legislative focus.
Various reports indicate that cryptocurrency advocacy groups spent upward of $200 million this election cycle to prevent the exact outcome Seiberg now forecasts. Meanwhile, the CFTC acted independently of Congress on Tuesday by approving equity perpetual futures for U.S. exchanges. If both congressional chambers flip, this agency-by-agency strategy—and the specific individuals appointed to those regulatory bodies—will dictate the future of the industry.
Frequently Asked Questions
What is the CLARITY Act’s current status?
The market structure bill passed the House in July 2025 but failed a Senate cloture vote in September. If it does not pass before the new Congress convenes on January 3, it will die and must be reintroduced.
Why does TD Cowen expect the CLARITY Act to stall?
TD Cowen analyst Jaret Seiberg believes a Democratic Congress will focus on investigating Trump and his crypto ties, creating a hostile political environment that prevents the bill from advancing over the next two years.
How much did crypto groups spend on this election cycle?
According to various reports, crypto groups spent more than $200 million during this cycle to prevent the political outcomes projected by TD Cowen.
Where was Bitcoin trading on election day?
Bitcoin was trading near $77,500 on Tuesday afternoon Eastern Time, following a morning dip to $76,300.
