Democrats Take Control of Congress, Crypto Legislation Slows as Trump Family’s Crypto Business Faces Investigation First

Author: Tiger Research

Compiled by: TechFlow

TechFlow Overview: After the midterm elections, the biggest policy tailwinds for the crypto industry over the past two years are disappearing. Tiger Research breaks down the three main factions of Democrats in the new Congress, and the conclusion is clear: in the short term, the market will not wait for new legislation, but rather investigations into Trump family venture World Liberty Financial and scrutiny of the SEC. The CLARITY Act is highly likely to remain stalled. For investors, the already enacted GENIUS stablecoin bill offers relative safety, while narratives betting on "comprehensive regulatory deregulation" will need to be repriced.

Key Takeaways

Democrats have secured majorities in both chambers, winning 54 Senate seats and 228 House seats respectively. After two years of Republican leadership, control of the digital asset legislative agenda will shift from Republicans to Democrats.

Industry critics such as Elizabeth Warren, Sherrod Brown, and Maxine Waters are likely to chair key committees. Their influence will make passing existing digital asset bills more difficult, and congressional attention is expected to shift to investigating Trump family digital assets venture World Liberty Financial (WLF).

Even moderate and pro-crypto Democrats hope to establish conflict-of-interest rules for public officials. Negotiations around these provisions could delay the CLARITY Act (Digital Asset Market Structure Act) beyond expectations.

Republicans will focus on defending the GENIUS Act (stablecoin bill) rather than pushing new legislation. They can still rely on the Senate’s 60-vote threshold to overcome filibusters, along with the deterrent effect of presidential veto power, to block Democratic proposals.

President Trump’s push for his crypto-friendly agenda will face greater constraints. The direction and pace of regulation will depend on how Democrats investigate Trump family business interests and how the White House responds.

1. Current State of US Midterm Election Results

Democrats have won 54 out of 100 Senate seats and 228 out of 435 House seats, surpassing majority thresholds of 51 and 218 respectively. This means a net gain of 7 seats in the Senate and 25 in the House. With 2 Senate races and 68 House races still pending, it is now certain that Democrats control both chambers.

Once the new Congress convenes in January 2027, Democrats will control the legislative agenda and committee chair positions.

This outcome is crucial for digital assets, as the two major legislative actions shaping the market over the past two years—the GENIUS Act and the CLARITY Act—were both driven by Republicans. Now Democrats will be able to block further legislation and revisit the framework established by Republicans, which will have widespread implications for the market.

2. Stances of Elected Democrats on Digital Assets

Based on past statements and records, elected Democratic congresspeople can roughly be divided into three categories:

Traditional critics: View digital assets as an industry designed to evade regulation.

Moderates: Support clear rules but insist on conflict-of-interest restrictions for public officials and strengthened consumer protections.

Smaller pro-crypto faction: Hope to bring the industry into the regulated financial system through a clear legal framework.

For the industry, the challenge lies in the fact that critics are likely to secure the chairmanship of committees that decide which bills move forward.

Moderate and pro-crypto Democrats are also not unconditional allies. They also want Congress to address Trump family digital assets ventures, making it unlikely that existing bills will advance unchanged.

2.1 Critics Likely to Chair Key Committees

This election has strengthened the position of industry critics within the Democratic party.

Represented by Senator Elizabeth Warren, who ran in the 2020 Democratic presidential primary, these lawmakers view digital assets as an industry built to bypass regulation and have consistently opposed industry-friendly legislation. As the majority party, Democrats make it more likely for these senators to chair committees overseeing digital asset bills.

Incoming Senator Sherrod Brown served three terms as Ohio’s senator and previously chaired the Senate Banking Committee, making him one of the industry’s most prominent critics. During his tenure as committee chair, he successfully blocked crypto legislation.

During a 2021 stablecoin hearing, Brown argued that stablecoins are neither decentralized nor transparent. Despite political groups backed by the crypto industry spending approximately $63 million to prevent his return to the Senate, he was re-elected. This history gives the industry no reason to expect a friendlier stance.

Representative Maxine Waters, who has served in the House since 1991, is widely considered the top choice to chair the House Financial Services Committee.

Waters currently serves as the ranking member of the committee. She chaired it from 2019 to 2023, becoming the first woman and first Black person to hold the position. With Democrats reclaiming the House, she is expected to resume this role.

When the GENIUS Act passed the Senate, Waters criticized its numerous loopholes, calling it unremarkable despite its "genius" name. She also described the recent Binance hack as a warning that the crypto industry cannot function without robust accountability mechanisms.

With these lawmakers leading key committees, the digital asset agenda advanced by Republicans over the past two years will face significantly greater resistance.

Their primary target is likely to be the Trump family’s digital assets venture, World Liberty Financial. Previously, reports indicated that an investor linked to the Abu Dhabi royal family acquired a 49% stake in WLF for approximately $500 million four days before Trump’s inauguration, prompting Democrats to request a Senate hearing.

Congress may also investigate why the SEC dropped over a dozen digital asset enforcement cases, with Waters already calling for an inquiry. Senate Democrats may also pressure regulators by delaying confirmations for key SEC and CFTC positions.

Therefore, headline news in the digital asset space during the first half of 2027 may center on investigations into entities connected to WLF and subpoenas directed at the SEC Chair, with legislative progress receiving comparatively less attention.

2.2 Moderates Support Clear Rules, But With Conditions

Democratic moderates generally support digital asset legislation while hoping to strengthen consumer protections and impose conflict-of-interest limits on public officials. If the CLARITY Act is revived in a Democrat-led Congress, their demands could shape its final form.

Representative Ro Khanna has long advocated for clear rules governing digital assets. In 2022, he co-sponsored the Digital Commodity Exchange Act, emphasizing consumer protection and transparency. In 2025, he stated that Congress could pass both stablecoin legislation and the CLARITY Act that year. However, at the same event, he also argued that elected officials should not hold memecoins.

Khanna is also viewed as a potential candidate for the 2028 presidential election, giving him even more reason to emphasize conflict-of-interest issues for public officials.

Incoming Senator and former North Carolina Governor Roy Cooper lacks a voting record at the federal level. However, during the campaign, he met with industry representatives and noted that the sector wants to comply with regulations. He believes companies simply want to know what the rules are and trust that they won’t change frequently. His stance balances support for regulatory stability with a focus on consumer protection.

As these lawmakers enter negotiations, they will likely demand modifications to existing bills.

Moderates may condition their support on adding provisions to prevent public officials from using digital assets for personal gain, exemplified by Khanna’s Ban Crypto Corruption Act. He has also launched an investigation requesting records of WLF’s dealings with the UAE.

Lawmakers like Cooper will likely push for enhanced safeguards against illicit financial activities and stronger consumer protections. However, provisions targeting the Trump family could prompt President Trump to veto related legislation.

Consequently, while lawmakers negotiate between the current text and the changes demanded by Democratic moderates, the CLARITY Act may continue to stall.

2.3 Pro-Crypto Democrats

This group includes lawmakers who voted yes on the CLARITY and GENIUS Acts in the House, as well as those who campaigned for establishing clear rules for digital assets. In a Democrat-controlled Congress, they serve as potential allies for the industry, even if they do not currently lead relevant committees.

Representative Ritchie Torres is one of the most vocal proponents of digital asset legislation within the Democratic party. He co-sponsored the CLARITY Act and the Blockchain Regulatory Certainty Act, led a letter urging Democratic colleagues to support CLARITY ahead of the 2025 House vote, and cast a yes vote on the GENIUS Act.

During an SEC oversight hearing in February 2026, Torres stated that he has long been bullish on emerging technologies like digital assets and blockchain. However, his support has limits. In January, following the exposure of suspicious Polymarket trades betting on Venezuelan President Maduro’s ouster, he joined 30 other lawmakers in proposing legislation to prohibit public officials from trading on prediction markets using non-public information.

Incoming Senator Chris Pappas also voted yes on both the CLARITY and GENIUS Acts during his time in the House. Following the votes, he stated that for the US to maintain its innovation lead, it must embrace new technologies and establish clear rules and safeguards for digital assets. He described the two bills as starting points for protecting consumers and supporting small business growth.

Meanwhile, Pappas expressed deep concern over President Trump disregarding existing ethical standards and legal requirements, calling for stricter anti-corruption rules for public officials. In May 2026, he also urged the House to investigate corruption and insider trading issues on prediction markets.

These lawmakers will likely seek to incorporate conflict-of-interest provisions into the CLARITY Act to win broader Democratic support.

Both Torres and Pappas support the bill while advocating strict measures to prevent officials from exploiting their positions for personal gain. In September’s Senate vote, zero Democrats supported it, with concerns over Trump family digital assets ventures being a primary obstacle. Addressing these concerns would remove one of the main reasons for Democratic opposition to the bill.

However, their ability to steer this process remains limited. Industry critics are likely to control key committees, and provisions targeting the president’s family could face pushback from the White House. For the industry, the next two years will largely depend on whether pro-crypto Democrats can leverage ethics provisions to craft a compromise acceptable to both sides.

3. Elected Republicans: Agenda Unchanged, Influence Diminished

Elected Republican congresspeople continue to support privately issued stablecoins, viewing them as a tool to maintain the dollar’s global dominance. They also oppose government-issued central bank digital currencies (CBDCs).

However, with several industry-friendly Republicans losing their races, including Senator Jon Husted and Representative Bryan Steil, chair of the House Digital Asset Subcommittee, their influence has waned.

3.1 Lawmakers Behind the GENIUS and CLARITY Acts

Senator Bill Hagerty and Representative Glenn Thompson were both re-elected, having played key roles in drafting the frameworks for stablecoin legislation and the CLARITY Act. With Republicans losing majorities in both chambers, their primary focus will shift to defending already achieved legislative gains.

Republican lawmakers will spend more time in the future defending current policies.

They will likely prioritize protecting the GENIUS Act, using the Senate’s 60-vote threshold to break filibusters and the threat of Trump’s veto to block Democratic efforts to tighten regulations. They may also back the SEC and CFTC in crafting rules within their existing mandates, allowing regulatory work to proceed without new legislation.

3.2 Firm Opposition to CBDC

Opposition to CBDCs represents one of the clearest consensus points among elected Republicans. They view digital asset policy as a pathway to foster industry growth while limiting government surveillance of financial activities.

These lawmakers support private-sector digital assets but firmly oppose government-issued digital dollars. They believe CBDCs could become tools for monitoring individual transactions, preferring private stablecoins as an alternative.

Their goal is to legislatively ban CBDCs. With Democrats controlling Congress, this path is effectively closed for the next two years.

The executive order signed by President Trump in January 2025 remains the primary basis for explicitly banning a US CBDC at the federal level. Since a future president could revoke this order, Republican lawmakers have consistently tried to codify the ban into law. Representative Tom Emmer’s Anti-CBDC Surveillance State Act passed the House in July 2025 but failed in the Senate. Under Democratic control of both chambers, prospects for this legislation have dimmed further.

Therefore, these lawmakers will likely focus on overseeing the implementation of the GENIUS Act. For example, they may scrutinize Treasury Department rulemaking to see if it introduces mechanisms allowing the government to monitor stablecoin transactions.

As long as the executive order remains in effect, the likelihood of a CBDC launch during Trump’s remaining term (through January 2029) is low. Consequently, their attention will likely shift toward privacy protections for stablecoin users.

4. Congressional Agenda Now Dominated by Democrats

Democrats have secured majorities in both chambers. Remaining election results will determine the size of their margins, but congressional control has already shifted hands.

Given their current stances, investigating Trump family digital assets ventures will take priority over passing new legislation. Lead Democrats on relevant committees had already listed these ventures as top investigative targets ahead of the election. As the majority party, they will wield subpoena power.

Even if Democrats revisit the CLARITY Act, they will likely demand stronger consumer protections and conflict-of-interest restrictions for public officials. In September’s Senate vote, the bill received zero Democratic support, with concerns over Trump family digital assets ventures being a primary hurdle.

Republicans will focus on defending the GENIUS Act and blocking Democratic proposals to tighten regulations. While their minority status makes passing new laws difficult, they retain significant power to obstruct legislation: most controversial bills require 60 votes to overcome Senate filibusters, and Trump retains veto authority over any legislation sent to his desk.

Passage of the CLARITY Act has become increasingly difficult. As the primary political driver of the administration’s crypto-friendly agenda, Trump’s maneuvering room will also narrow. Republican policy objectives remain largely unchanged, but progress is likely to slow.

To gauge the direction and pace of regulation, the industry needs to watch how Democratic leaders investigate Trump family digital asset interests and how the White House responds.