The Democratic sweep of Congress has closed the door on crypto market structure legislation such as the CLARITY Act, which would divide digital asset oversight between the SEC and CFTC, for the next two years — and may rule out any version the industry would support — TD Cowen said in a note to clients published after the Associated Press called both chambers.

"We view this outcome as negative for our sectors," wrote Jaret Seiberg, the firm's Washington analyst. The caveat he has repeated throughout the election cycle still holds: the result "will not impact the ability of regulators to push their de-regulatory agendas," and he expects the SEC and CFTC "to remain active including on crypto, prediction markets and perps."

The items Seiberg flags to watch are the lame-duck session, congressional investigations of Trump, the debt ceiling and populist bills such as interest rate caps.

The note lands after a bruising stretch for the industry: a record $6.34 billion Binance hack, the loss of House allies Bryan Steil, Zach Nunn and Ann Wagner, and more than $170 million in super PAC spending that failed to deliver the Congress it was meant to buy.

CLARITY, Brown and World Liberty

Seiberg's crypto outlook builds on a note he published Tuesday, before the results came in. Sherrod Brown's return to the Senate from Ohio — after roughly $64 million in industry money went toward stopping him — "damages the crypto industry's political clout," Seiberg wrote. He had not expected the CLARITY Act to pass in the next Congress, and Brown's win "makes us more confident in our prediction."

The bill, which passed the House in July 2025 and failed a Senate cloture vote 49-50 in September — short of the 60 votes needed to advance — dies on Jan. 3, when the new Congress is seated, unless the lame-duck session revives it. Seiberg goes further than most: Democratic investigations of the Trump family's crypto ventures, including World Liberty Financial, "may make it impossible to advance a version of Clarity that the crypto sector could back."

That shifts the question from timing to whether any bill the industry wants can pass at all under this Congress.

The regulators are the counterweight. Seiberg sees no change at the SEC or CFTC, which have cleared bitcoin perpetuals, equity perps and a joint crypto taxonomy this year without Congress. The CME lawsuit over the perps approval is the live threat to that path — not the election.

Debt Ceiling, Confirmations and the Fed

The rest of the note reads as macro risk for an asset that has traded in line with the Nasdaq all autumn. Seiberg expects a push to raise the debt ceiling during the lame-duck session but doubts it will succeed, since Democrats will want the vote as leverage next year. Divided government raises the odds of a shutdown or default standoff in 2027.

He also sees Trump and Sen. Elizabeth Warren, the likely Senate Banking chair, finding common ground on an interest rate cap — closer to 36% than the 10% Trump has floated — with fintechs more exposed than banks.

Two items touch the Federal Reserve. Seiberg does not expect Democrats to confirm Trump nominees unless the president fills Democratic seats at agencies such as the FDIC and SEC, which he considers unlikely. And the inability to confirm a replacement "may make Trump less inclined to fire" Fed Governor Lisa Cook, removing one source of pressure on a central bank that is leaning toward a December hike.

This article first appeared on Bitcoin Magazine and is written by Micah Zimmerman.