WASHINGTON, D.C. / CryptoWire.AI / – The Democratic sweep of Congress in the November 3 midterm elections is likely to put the crypto industry on the defensive in Washington, analysts say. The new Congress is expected to focus on scrutinising President Donald Trump’s personal crypto dealings rather than passing industry-friendly laws. That could push the Clarity Act, a market structure bill for digital assets, further down the agenda.
Crypto critic Sherrod Brown is returning to the Senate after defeating Republican Senator Jon Husted in Ohio. Brown chaired the Senate Banking Committee until early 2025. Crypto-backed political groups had spent about $64 million trying to stop him, according to Cointelegraph. Senator Elizabeth Warren, another critic, is expected to keep significant influence over financial policy. The industry spent more than $200 million on the midterms, hoping to elect lawmakers who would back new rules.
Jaret Seiberg, Washington policy analyst at TD Cowen, said in a note that Brown’s victory damages the crypto industry’s political clout because the sector had worked to defeat him. He said the firm had not expected the Clarity Act to advance in the next two years and was now more confident in that view. The bill stalled in the Senate in September after failing a procedural vote.
Trump’s crypto ventures face scrutiny
Seiberg said Democrats will investigate Trump’s crypto ties, including World Liberty Financial, the Trump family’s crypto venture. The resulting political climate may make it impossible to pass a version of the bill the industry could support, he said. Mike Townsend, managing director of legislative and regulatory affairs at Charles Schwab, said he expects Democrats to seek a much tougher version of the bill next year.
The stakes go beyond market structure rules. The industry sees stablecoins, decentralised finance, banking access, tokenization and clear tax policy as key to keeping the U.S. competitive in the global crypto economy. Democrats have generally been less supportive of crypto than Republicans, though the gap has narrowed as more Democrats embrace the sector. Continued bipartisan engagement will be needed to keep those priorities on the agenda.
Industry points to pro-crypto gains
Kara Calvert, Coinbase’s vice president of U.S. policy, said the 120th Congress is on track to include more new pro-crypto members than any previous freshman class. Advocacy group Stand With Crypto said 19 candidates it rates as pro-crypto were elected to the Senate, against eight it considers anti-crypto. In the House, it counted 228 pro-crypto winners and 106 it deems anti-crypto. Calvert said Democrats and Republicans alike know clear rules protect consumers and keep innovation in the U.S.
Fairshake, the super PAC backing pro-crypto candidates, has won 29 of the 34 races it spent on so far, Reuters reported. Several industry figures expect the Clarity Act to remain stalled until 2028, but financial regulators can still advance industry rules. James Butterfill, head of research at CoinShares, said U.S. crypto stocks would likely be more sensitive to the shift than bitcoin. He said established, compliant operators could even benefit from greater scrutiny of competitors.