The cryptocurrency sector’s ambition to establish a structured regulatory framework via the U.S. Congress encountered another major hurdle on Tuesday following the Democratic party’s capture of majorities in both houses during the midterm elections.
“Regarding digital assets, this Democratic victory could very well serve as the final nail in the Clarity Act’s coffin,” Quantum Economics founder, bitcoin maximalist, and market analyst Mati Greenspan stated to CoinDesk, observing that he considers this a disappointing milestone for the industry.
Greenspan noted that the proposed legislation failed even a procedural vote back in September when Republicans held majorities in both legislative branches, meaning the sector now faces the daunting task of beginning anew within a divided Washington.
Greenspan’s perspective is shared by others.
Stefan Muehlbauer, who leads U.S. government affairs at blockchain security organization CertiK, remarked that the Clarity Act in its existing format appears effectively defunct.
The sector invested heavily throughout the electoral cycle in pursuit of clear rules governing digital assets and their intermediary entities. Crypto political action committees funneled approximately $170.5 million into political campaigns, according to data provided to CoinDesk by Anton Golub.
The Forte go-to-market leader and former crypto exchange executive noted that Republican candidates captured at least $125.5 million of that total electoral expenditure.
Even with congressional majorities and a supportive president in Donald Trump, the Clarity Act failed to advance during September. Golub explained that with Democrats returning to power in both chambers, the likelihood of passing the measure in its current state has diminished further.
The Forte founder concurred that the bill faces severe challenges, though he credits President Trump with altering how regulatory bodies approach the sector today.
Golub observed that while Trump fostered a more welcoming ecosystem for crypto firms, his family’s business ties simultaneously provided Democrats with grounds to resist favorable digital asset legislation.
One major roadblock has centered on the ongoing conflict between traditional financial institutions and crypto firms regarding stablecoin yield programs. Banks strongly oppose allowing exchanges to distribute rewards on dollar-pegged tokens, expressing concern that capital might drain from standard bank accounts.
Golub stated that Republicans were unable to resolve this dispute while managing Congress, leading him to conclude that the legislation’s prospects in its previous iteration have vanished.
Nonetheless, he does not anticipate the election outcome to halt the expansion of crypto trading derivatives. Golub highlighted Tuesday’s ruling by the Commodity Futures Trading Commission permitting single-stock perpetual futures on approved domestic platforms, though a federal judge signaled on Tuesday that such instruments might face legal hurdles under CFTC authority.
Perpetual futures enable traders to speculate on market prices without taking ownership of underlying assets or maintaining fixed expiration dates. Trading volumes for these contracts have surged as digital platforms branch into equities, commodities, and additional traditional asset classes.
Golub expressed anticipation that perpetual futures will assume a significantly larger role across U.S. derivatives markets, expanding outward from crypto into equities and alternative sectors.
Muehlbauer anticipates that Democrats will ramp up oversight of digital asset enterprises and Trump’s commercial crypto endeavors via congressional inquiries and probes, with a primary focus on money laundering prevention, cybersecurity measures, and consumer defense.
Conversely, TBV venture capital firm co-founder Brent Fulfer presented an alternative viewpoint.
Fulfer argued that regulatory clarity effectively perished back in September while Republicans managed the Senate, emphasizing that over 70 House Democrats previously backed the bill and suggesting that legislation incorporating bipartisan backing and conflict-of-interest safeguards could achieve greater longevity.
AdLunam founder and veteran crypto entrepreneur Jason Fernandes adopted a more conciliatory tone, expressing optimism that the sector might engage constructively with Democrats rather than opposing them.
Fernandes suggested that targeted regulation and enforcement directed at malicious participants, while intimidating even for legitimate industry operators, ultimately expands the entire market ecosystem.
He advised digital asset firms to endorse Democratic initiatives aimed at cleaning up marketplace operations, provided legislators maintain a balanced framework rather than penalizing the wider industry for the misconduct of a minority.
Conversely, alternative voices remain pessimistic. Human.tech co-founder Shady El Damaty contends that Democrats will likely leverage the opportunity to investigate Trump’s crypto ventures, political contributions, and prediction markets—pursuits they previously pledged to examine and which CoinDesk covered extensively, including in a detailed pre-election guide.
El Damaty specifically mentioned Robinhood and its expansion into tokenized equities, forecasting heightened scrutiny toward its financial products. His caution arrives as Amazon, Tesla, SpaceX, and other major corporations have formally contested a separate initiative by OKX and Intercontinental Exchange to facilitate trading in tokenized company shares, though those specific objections do not directly target Robinhood.
El Damaty concluded that Robinhood faces a difficult path ahead, noting that despite his appreciation for the platform, it will likely confront rigorous examination concerning its tokenized stock offerings and aggressive crypto strategy.
Originally published at https://www.coindesk.com/policy/2026/11/04/u-s-democratic-sweep-could-be-the-final-nail-in-the-clarity-act-s-coffin.
