Democrats won control of both the House and the Senate in Tuesday’s midterm elections, the Associated Press reported, handing the committees that oversee crypto to the party whose senators blocked the industry’s market structure bill this session.
In Ohio, Democrat Sherrod Brown beat Republican Sen. Jon Husted despite heavy crypto spending against him. Politico put the industry’s outlay on the race at more than $55 million, while Reuters reported before the vote that the figure topped $68 million. The Fairshake super PAC network had spent more than $40 million to unseat Brown in 2024, when he chaired the Senate Banking Committee, according to Politico.
Sen. Elizabeth Warren (D-Mass.), who has long pushed for tighter crypto oversight, “appears poised” to chair Senate Banking, Politico reported. One industry lobbyist, granted anonymity by Politico, called it “an awful night for crypto,” adding, “From a Hill perspective, they are going to be lit on fire against crypto.”
Others were less worried. Coinbase Vice President for U.S. Policy Kara Calvert told Politico that “you have a new class coming in that is open and is looking at this,” referring to incoming Democratic freshmen. Grayscale Head of Research Zach Pandl argued last week that a flip in Congress would not materially change crypto’s prospects because the industry is bipartisan, global and institutional.
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A Harder Road for the Clarity Act
The Democratic sweep could further reduce the odds of the Clarity Act passing in its current form. Senate Democrats had refused to advance the bill, which would split crypto oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission, unless it included stronger language barring Trump, his family and administration officials from profiting from crypto ventures. While the CFTC and SEC have moved to fill the regulatory gap with rules of their own, JPMorgan analysts told Reuters that rules written under President Donald Trump could be undone by a later administration. “The Clarity Act was already stalled so a Democratic Congress will delay it further,” crypto commentator Aaron Bennett wrote on X.
AI May Be Next
Data centers may also face more scrutiny. In March, Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez unveiled a bill to pause large new AI data centers until Congress passes federal AI rules.
Franklin Crypto Head Chris Perkins said on Unchained’s Bits + Bips the day before the vote that, heading into the midterms, “that entire industry is in the crosshairs, data centers, et cetera.” Jim Bianco of Bianco Research said on an Oct. 26 episode that Democrats are split between “decelerationists” and labor unions he called “accelerationists.”
Solana co-founder Anatoly Yakovenko posted on X “If you are in data centers, pivot to crypto” while Elon Musk, whom AP listed among possible targets of Democratic investigations, wrote on X “Data centers in space looking pretty appealing right now” about two hours later.
Lumida CEO Ram Ahluwalia said on the Bits + Bips episode the day before the vote that “if the Dems do take both, I think you get a one and done washout, and that resets where asset prices are.”
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