Crypto policy after Democrats sweep 2026 midterms

Democrats’ sweep of Congress likely resets the political calculus for crypto, ushering in a more adversarial approach in Washington and pushing industry-friendly legislation like the Clarity Act to the back burner.

With crypto critics like Sherrod Brown, D-Ohio, returning to the Senate and Sen. Elizabeth Warren, D-Mass., retaining significant influence over financial policy, analysts say the new Congress is likely to focus on scrutinizing President Donald Trump’s personal crypto dealings over supportive industry legislation.

For years, crypto fought an uphill battle in Washington, asking for clear operating rules, but often landing on the receiving end of regulation by enforcement. That shifted after Trump’s 2024 election victory, giving the industry a reprieve and seat at the policy table.

“We see Sherrod Brown winning in Ohio as damaging the crypto industry’s political clout as the industry worked to defeat him,” Jaret Seiberg, TD Cowen’s Washington analyst, said in a note Wednesday. “We did not think Clarity could advance over the next two years. This makes us more confident in our prediction.”

The crypto industry spent more than $200 million to sway the midterms, hoping to get leaders elected that could push a comprehensive crypto market structure bill over the finish line after the Clarity Act stalled in the Senate.

Seiberg emphasized that Democrats “will investigate Trump’s crypto entanglements including World Liberty Financial” and said “the resulting political environment may make it impossible to advance a version of Clarity that the crypto sector could back.”

Mike Townsend, Charles Schwab’s managing director of legislative and regulatory affairs, said he expects “Democrats to push next year for a version of the bill that is much tougher on cryptocurrency companies.”

The stakes extend beyond market structure legislation via Clarity. Stablecoin innovation; decentralized finance, or DeFi, development; banking access; tokenization; and sensible tax policy are priorities the industry sees as important to ensuring the U.S. remains competitive in the global crypto economy.

The industry will need continued bipartisan engagement to ensure these priorities aren’t sidelined by changing political dynamics. And Democrats have historically been less supportive of crypto than Republicans, though that divide has narrowed as more Democrats embrace the industry.

The implications of Democrats’ big win aren’t all bad. Crypto has reached a level of financial integration that could be difficult to reverse, with its future increasingly centered on establishing crypto as financial infrastructure. Even with the Clarity Act potentially stalled until 2028, key financial regulators can help advance the industry through rule-making.

Coinbase’s vice president of U.S. policy, Kara Calvert, points out that the election results point to a historic shift…