The Democratic Party won control of both houses of Congress in the mid-term elections in the United States, putting the stalled CLARITY Act in a new situation as congressional power shifts; at the same time, federal regulatory agencies continue to formulate their own encryption rules.

• The Democratic Party will take over Congress after the new session of Congress opens on January 3, 2027.
• The procedural vote on the " CLARITY Act " in September is still 11 votes short of the 60-vote threshold required by the Senate.
• Opposition within the Republican Party includes concerns that stablecoins will draw deposits away from community banks and credit unions.
• SEC and CFTC are advancing regulatory measures involving encrypted financing, custody, and trading in accordance with existing legal authorities.

The Associated Press reported that the Democratic Party won a majority in both the House of Representatives and the Senate in the elections on November 3, ending the Republican Party's two-year control over the federal government in Washington. The new Congress will convene in January next year, while Donald Trump will still serve as president.

During the remaining term of these "lame ducks," the Republican Party will still maintain its current majority in Congress. According to The Associated Press, lawmakers will face negotiations over government funding before the end of the year, and at the same time, the Republican Party will also have to conduct internal leadership elections after their defeat in the elections.

The " CLARITY Bill" remains stalled after the voting in September.

Records from the Senate on September 15 show that the motion to advance the “CLARITY Act” received 49 votes in favor and 50 votes against, with another senator being absent. Supporters needed to reach 60 votes in order to overcome procedural obstacles and initiate deliberation.

At that time, the senators voted on whether to proceed with the bill, not on whether to pass its final text. After the motion was rejected, Republican Senator Thom Tillis submitted a motion to reconsider that vote.

As previously reported by crypto.news, the related negotiations have not been resolved after this procedural vote in the Senate failed. Seven Democratic senators stated the following day that they are still committed to advancing encryption legislation that is supported by both parties.

The CLARITY Act will divide regulatory responsibilities between the U.S. Securities and Exchange Commission (SEC) and the CFTC (Commodity Futures Trading Commission), which includes a registration framework for digital commodity intermediaries. The House of Representatives passed its version in July 2025, and subsequent negotiations in the Senate made modifications to the text.

Opponents are not limited to Democrats. Republican senators Susan Collins, Josh Hawley, Jerry Moran, and Tillis voted against this procedural motion together.

In a statement on September 16, Collins referred to the bill as "a constantly changing target" and stated that its over 600 pages of content still required further study. She questioned whether the relevant provisions in the bill would draw deposits away from community banks and credit cooperatives, thereby reducing the funds available for housing mortgages and small business loans.

SEC Handles financing and custody issues separately

Before the CLARITY bill encountered setbacks in the Senate, SEC had already begun to propose rule adjustments. On August 18th, Chairman Paul Atkins outlined the 'Regulations on the Supervision of Cryptographic Assets' ( Regulation Crypto Assets ), stating that it would provide exemptions for the issuance of certain cryptographic assets sold through investment contracts.

In his official statement, he stated that one exemption for startups would allow companies to issue up to $5 million over a period of four years; another financing exemption would permit them to raise a maximum of $75 million per year. Both exemptions will come with information disclosure requirements.

The proposal also includes a “safe harbor” arrangement to define when investment contracts associated with certain crypto assets no longer exist. Atkins indicates that legislation is still “indispensable” for establishing permanent rules, and reiterates the committee’s support for the CLARITY Act.

Hosting is another separate topic being promoted by SEC. The proposal put forward on October 1st will cover registered investment advisors, registered investment companies, as well as business development companies. The specific details are contained in the proposed encrypted hosting framework.

In limited circumstances, if investment advisors determine that there is no available compliant custodian for a particular asset, they may hold the client's crypto assets themselves. Committee member Hester Peirce stated that investment advisors must repeat this assessment on a quarterly basis.

For state-level trust company custody, investment advisors and funds need to assess whether the institution has obtained state authorization, as well as whether it has written safeguards against theft, loss, abuse, and misappropriation. Such inspections will be conducted annually. The aforementioned adjustments are currently open for public comment and have not yet been adopted as final rules.

CFTC's consultation focuses on encrypted transactions and markets

The related work for CFTC began on September 17th with submissions for review by the White House, followed by the announcement of a public consultation on October 5th.

In its notification on the establishment of the rules, the institution sought feedback regarding the framework for retail transactions of encrypted commodities covered by Article 2(c)(2)(D) of the Commodity Exchange Act.

Chairman Michael Selig stated that this measure will utilize existing statutory authorities. The issues raised in the consultation document include: how to prevent abuse, how to clarify compliance expectations, and how to establish a designated contract market registration category specifically for cryptocurrencies.

CFTC indicates that the feedback received will provide a basis for potential actions in the future, including the formulation of formal rules. Written opinions must be submitted within 60 days after this notice is published in the Federal Register.