Investment committees weighing a first allocation to digital assets are asking whether the 2026 US midterm elections will change the rules. We do not believe the midterms will themselves significantly change the digital asset regulatory framework. It may be more useful to examine the changes under each outcome and what stays fixed regardless.
The Clarity Act convenes in January 2027
The Digital Asset Market Clarity Act (“Clarity Act”), which would have moved day-to-day oversight of most digital commodity trading (digital assets treated like gold or oil rather than like a share in a company) outside the securities law framework, stalled on September 15, 2026. The Senate failed to invoke cloture (the procedure that ends debate and allows a final vote) on a vote of 49 to 50, short of the 60 needed, with Republicans holding 53 seats.
The bill foundered on two issues unrelated to the underlying technology: ethics provisions addressing federal officials’ personal crypto holdings, and stablecoin yield language that regional banks argued would speed the movement of customer deposits out of banks. Senator Tillis has filed a motion to reconsider, but we believe the bill is best treated as dead until the 120th Congress convenes in January 2027.
A Democratic House would likely delay market structure legislation further
If Democrats win the House, any bill emerging from a divided 120th Congress will likely include significantly stronger consumer protection, conflict-of-interest, and decentralized finance (DeFi) disclosure provisions, further delaying approval of the Clarity Act. DeFi refers to lending and trading services that run on blockchain software rather than through a bank or broker.
Oversight hearings, document requests, and appropriations riders (conditions attached to spending bills) aimed at digital asset initiatives at the Securities and Exchange Commission (SEC) would become more frequent and more adversarial. However, we do not believe the SEC’s existing interpretive positions (its published readings of existing law) and exemptive positions (permissions to operate outside a specific rule) are automatically undone by a change in House or Senate control alone.
Republican control would speed nominations but not remove the 60-vote threshold
Republicans retaining both chambers would remove the oversight friction a Democratic House would add, but would not remove the Senate’s 60-vote threshold, which does not depend on which party holds the majority. Republican control improves the odds of a 2027 bill resembling the current text, since the negotiators behind the September vote would retain their committee positions. Republican control improves the odds of a 2027 bill resembling the current text, since the negotiators who nearly reached 49 votes in September would retain their committee positions. However, it does not guarantee resolution of the disputes over ethics provisions and stablecoin yield that sank that vote.
Unified control would also move nominees to the SEC’s vacant seats through committee with less delay, reduce appropriations pressure on the agency’s deregulatory priorities compared with divided government, and allow existing regulatory proposals to be enacted much faster.
The SEC framework and the 60-vote rule stay fixed under either outcome
Regardless of which party wins the midterms, we believe the SEC will continue to shift away from regulation-by-enforcement (setting rules through penalties against individual firms rather than through formal rulemaking) toward the interpretive and exemptive approach that has characterized the SEC’s digital asset work over the past year.
Crypto market structure legislation requires 60 Senate votes that neither party is likely to hold outright after the November election. Furthermore, the SEC’s interpretive and exemptive framework (including its March interpretive release reclassifying several major digital assets as non-security digital commodities) rests on existing statutory authority rather than new legislation. Consequently, this framework is not automatically reopened by a change in congressional control
A change in the Commission’s own composition or leadership, which depends on confirmation and resignation timing rather than the midterms, is a more direct and more immediate threat to that framework’s durability than the election outcome itself. For committees assessing a first digital asset allocation, the Commission’s composition is the variable to monitor.
FAQ
Will the 2026 midterms change US crypto regulation?
We do not believe the 2026 US midterm elections will themselves significantly change the digital asset regulatory framework. A Democratic House would likely add oversight hearings and stronger consumer protection provisions to any market structure bill, while Republican control of both chambers would remove that oversight friction. Neither outcome removes the Senate’s 60-vote threshold.
Is the Clarity Act dead?
The Digital Asset Market Clarity Act (Clarity Act) stalled on September 15, 2026, when the Senate failed to end debate on the bill, and we believe it is best treated as dead until the 120th Congress convenes in January 2027. Senator Tillis has filed a motion to reconsider. The bill would have moved day-to-day oversight of most digital commodity trading outside the securities law framework.
Why did the Clarity Act fail in the Senate?
The bill foundered on two issues unrelated to the underlying technology: ethics provisions addressing federal officials’ personal crypto holdings, and stablecoin yield language. Stablecoins are digital tokens designed to hold a steady value, and regional banks argued the yield language would speed the movement of customer deposits out of banks. The bill fell short of the 60 votes needed to end debate.
How many Senate votes does crypto market structure legislation need?
Crypto market structure legislation needs 60 votes in the Senate, a threshold that does not depend on which party holds the majority. We believe neither party is likely to hold 60 votes outright after the November election.
Does a change in Congress affect the SEC’s crypto rules?
We do not believe a change in House or Senate control alone automatically undoes the Securities and Exchange Commission’s (SEC) existing interpretive and exemptive positions on digital assets, which rest on existing statutory authority rather than new legislation. A change in the Commission’s own composition or leadership, which depends on confirmation and resignation timing rather than the midterms, is a more direct threat to that framework.
