Midterms Loom over Crypto as Senate Pushes CLARITY to September

Senate Majority Leader John Thune was set to file for "cloture" to move the bill forward before senators left for the August recess on 7 Aug, positioning CLARITY for action when lawmakers return in September.

When they come back, however, lawmakers will still have to resolve issues that have prevented the measure's passage so far, including one on stablecoin yield and another on an ethics deal. 

CLARITY, which would create clearer rules for the US crypto industry, including setting out the roles of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), was initially passed by the House in 2025.

Getting the legislation through the Senate has been more difficult. Most major legislation needs 60 votes to move through the Senate, meaning Republicans cannot pass it alone. And now they also face a tighter deadline as senators will return to Washington only weeks before the November election, which could change the balance of power in Congress - and with it, the fate of the CLARITY Act.

Senator Cynthia Lummis, one of the bill's biggest supporters, expressed frustration over the delay on 7 Aug but said she would keep fighting for it. "We've come too far to quit now. I will not give up," the Wyoming Republican said in a statement shared on X. She added that the industry needs clear rules, consumers need protection from scams and law enforcement needs tools to go after bad actors.

The delay moves a potential vote on CLARITY closer to the November 2026 midterm elections, when control of both the House and Senate will be at stake. For crypto, the outcome could matter a lot as both chambers are currently controlled by Republicans, who have been the chief champions of CLARITY. 

What are the midterms?

The US midterm elections take place halfway through a president's four-year term. This year's elections will be held on 3 Nov, when voters will choose all 435 members of the House of Representatives and 35 of the 100 members of the Senate.

That Republicans could lose control of one or both chambers is possible, with experts noting that the House looks particularly competitive. The Cook Political Report – an independent and non-partisan newsletter that analyzes US elections and campaigns – said in July that Democrats are in a strong position to win the House, although Republicans still have a path to keeping control.

The report puts 205 House seats in the Democratic solid, likely or lean categories and 212 in the same categories for Republicans. Another 18 races are considered too close to call. A party needs 218 seats to control the House.

Recent polling also shows a close race, with a Reuters/Ipsos poll published on 7 Aug finding that registered voters were more likely to support a Democratic candidate than a Republican if congressional elections were held now.

Democrats also held a small advantage on the economy, with 37% of voters saying the party had the better economic plan compared with 36% for Republicans.

The Senate could also be competitive, although Democrats face a harder path to taking control. Republicans currently hold a 53-47 majority, meaning Democrats would need to win several Republican-held seats while keeping their own.

Why does this matter for crypto? 

Midterms matter for crypto because the party that controls the House or Senate has more power over which bills, such as the CLARITY Act, move forward and who leads the committees that work on them.

Republicans have made passing crypto legislation a major priority, so a Democratic win in either the House or Senate could give the party more power to reshape or delay parts of that agenda. That would not necessarily derail the CLARITY Act, which has attracted bipartisan support, but a change in control could affect the final shape of the bill - and how long it takes to become law.

The Senate Banking Committee advanced its version of CLARITY in May in a bipartisan 15-9 vote, but Republicans still need Democratic support to get the legislation through the full Senate.

What's next?

When senators return to Washington in September, Republicans will still need Democratic support to get the bill through the Senate – and even if they get it, that is not the end of the road.

If the Senate passes its version, the House and Senate would then need to agree on the same final bill before sending it to President Donald Trump to be signed into law.

In the meantime, both crypto-native and traditional finance firms have been preparing for the possibility that the legislation may not pass. Ryan Louvar, chief legal officer at WisdomTree, told Sandmark this week that crypto adoption would continue without it, but some institutions may move more slowly.

He said that regulators are on the same boat. "I think each agency is sort of preparing for if it doesn't pass," Louvar said, adding that the SEC and CFTC would have rule making "at the ready" but noting that there are limits to what the agencies can do without Congress.