A Democratic sweep of Congress shuts the door on digital asset market structure bills like the Clarity Act for the next two years and could rule out any alternative that the sector would endorse, TD Cowen told clients via a note released after the Associated Press projected winners for both chambers.
“We view this outcome as negative for our sectors,” Washington analyst Jaret Seiberg penned. The caveat he has reiterated throughout the cycle remains valid: the election “will not impact the ability of regulators to push their de-regulatory agendas,” and he anticipates that the SEC and CFTC “to remain active including on crypto, prediction markets and perps.”
The specific developments he highlights to monitor include the lame-duck session, congressional inquiries into Trump, the debt ceiling, and populist measures such as interest rate caps.
This advisory note follows a tough week for the sector, which featured a record $6.34 billion Binance hack, the defeat of House supporters Bryan Steil, Zach Nunn, and Ann Wagner, alongside upwards of $170 million in super PAC expenditures that failed to secure the desired congressional majority.
Clarity, Brown and World Liberty
Seiberg’s cryptocurrency perspectives expand upon a note he released on Tuesday prior to the election outcomes. Sherrod Brown coming back to the Senate representing Ohio, following roughly $64 million in sector expenditures aimed at defeating him, “damages the crypto industry’s political clout,” he noted. He had not anticipated the passage of the CLARITY Act within the upcoming Congress; Brown’s victory “makes us more confident in our prediction.”
The legislation, which cleared the House in July 2025 and stumbled in a Senate cloture vote of 49-50 during September, is set to lapse on January 3 unless the lame-duck session revives it. Seiberg takes his analysis further than most observers: Democratic inquiries into the Trump family’s crypto projects, encompassing World Liberty Financial, “may make it impossible to advance a version of Clarity that the crypto sector could back.”
This shifts the core question from timing to whether any bill desired by the industry can actually pass under this legislative body.
Federal agencies serve as the balancing force. Seiberg foresees no alterations at the SEC or CFTC, both of which have cleared bitcoin perpetuals, equity perps, and a joint crypto taxonomy over the course of the year without congressional intervention. The ongoing CME lawsuit challenging the perps approval represents the active threat to that trajectory rather than the election results.
Debt ceiling, confirmations and the Fed
The remaining portion of the note outlines broader macroeconomic risks for an asset class that has traded in tandem with the Nasdaq throughout the autumn months. Seiberg anticipates an effort to elevate the debt ceiling during the lame-duck period, though he remains skeptical of its success given that Democrats will likely treat the vote as strategic leverage for the following year.
A divided government elevates the likelihood of a government shutdown or default standoff by 2027. He projects that Trump and Senator Elizabeth Warren, the likely Senate Banking chair, will discover common ground regarding an interest rate cap closer to 36% rather than the 10% figure floated by Trump, leaving fintech firms more exposed than traditional banking institutions.
Two specific topics involve the Federal Reserve. Seiberg does not expect Democrats to confirm Trump’s nominees unless the president fills Democratic vacancies within agencies like the FDIC and SEC, which he views as improbable. Moreover, the inability to secure confirmation for a replacement “may make Trump less inclined to fire” Fed Governor Lisa Cook, eliminating one pressure point on a central bank that is currently leaning toward a December hike.
Originally published at https://bitcoinmagazine.com/news/td-cowen-democratic-sweep-clarity.
