Democrats have won both chambers of Congress in the US midterm elections, leaving the stalled CLARITY Act facing a change in congressional control while federal regulators continue developing their own crypto rules.
Summary
- Democrats will take control of Congress when the new session begins on Jan. 3, 2027.
- CLARITY’s September procedural vote fell 11 votes short of the Senate’s required 60-vote threshold.
- Republican opposition included concerns about stablecoins drawing deposits away from community banks and credit unions.
- SEC and CFTC initiatives cover crypto fundraising, custody and trading under their existing legal authority.
The Associated Press reported that Democrats secured House and Senate majorities in the Nov. 3 elections, ending two years of unified Republican control in Washington. The incoming Congress convenes in January, with Donald Trump remaining president.
Republicans retain their current congressional majorities during the remaining lame-duck session. AP reported that lawmakers face government funding negotiations before the end of the year, alongside internal leadership elections following the Republican defeat.
CLARITY Act remains stalled after its September vote
The Senate’s Sept. 15 record shows that a motion to advance CLARITY received 49 votes in favor and 50 against, with one senator absent. Supporters needed 60 votes to overcome the procedural hurdle and begin consideration.
Senators were voting on whether to proceed with the legislation, not whether to pass its final text. Following the rejection, Republican Sen. Thom Tillis entered a motion to reconsider the vote.
As crypto.news previously reported, the failed Senate procedural vote left negotiations unresolved. Seven Democratic senators said the following day that they remained committed to bipartisan crypto legislation.
CLARITY would divide responsibilities between the Securities and Exchange Commission and the Commodity Futures Trading Commission, including a registration framework for digital commodity intermediaries. The House passed its version in July 2025, while subsequent Senate negotiations produced changes to the text.
Opposition extended beyond Democrats. Republican Sens. Susan Collins, Josh Hawley and Jerry Moran joined Tillis in voting against the procedural motion.
In a Sept. 16 statement, Collins called the legislation “a moving target” and said its more than 600 pages needed further study. She questioned whether its provisions could draw deposits away from community banks and credit unions, reducing funds available for mortgages and small-business lending.
SEC proposals address fundraising and custody separately
The SEC began proposing changes before CLARITY’s Senate setback. Chairman Paul Atkins outlined Regulation Crypto Assets on Aug. 18, describing exemptions for certain offerings involving crypto assets sold through investment contracts.
His official statement described a startup exemption permitting offerings of up to $5 million over four years and a fundraising exemption allowing up to $75 million annually. Both would carry disclosure requirements.
The proposal includes a safe harbor addressing when the investment contract associated with a crypto asset ceases to exist. Atkins said legislation remained “indispensable” to durable rules and reaffirmed the commission’s support for CLARITY.
Custody is the subject of a separate SEC initiative. Its Oct. 1 proposal would cover registered investment advisers, registered investment companies and business development companies, as detailed in the proposed crypto custody framework.
Advisers could hold client crypto themselves in limited circumstances after determining that no permitted custodian was available for the asset. Commissioner Hester Peirce said advisers would have to repeat that assessment quarterly.
For state trust company custody, advisers and funds would assess state authorization and written safeguards against theft, loss, misuse and misappropriation. Those checks would recur annually. The changes were issued for public comment, not adopted as final rules.
CFTC consultation focuses on crypto transactions and markets
The CFTC’s work progressed from a White House review submission on Sept. 17 to a public consultation announced on Oct. 5.
In its rulemaking notice, the agency sought feedback on a framework for retail crypto commodity transactions covered by Section 2(c)(2)(D) of the Commodity Exchange Act.
Chairman Michael Selig said the initiative would use existing statutory authority. The consultation asks how the commission could prevent abusive practices, explain compliance expectations, and establish a crypto-specific category of designated contract market registration.
The CFTC said responses would inform possible future action, including rulemaking. Written comments are due within 60 days of the notice’s publication in the Federal Register.
