One Week Countdown to Midterm Elections! Will Crypto Change?

midterm elections." The voting date for 2026 is November 3, and Trump himself will not run for re-election.

The U.S. Congress is divided into the House of Representatives and the Senate, with each house electing members in different ways.

All 435 seats in the House of Representatives are up for election, with a two-year term for members; seats are allocated based on population, with one representative elected from each district. To achieve a majority, a party needs to secure 218 seats.

The Senate has a total of 100 seats, with each state having two fixed seats, a six-year term for senators, and staggered elections. This year, 35 seats are up for election, including 33 regular elections and two special elections to fill unexpired terms. To determine the Senate's control, the 65 un-elected seats must also be considered. Currently, the Republican Party holds 53 seats. The Democratic Party and two independent senators form a coalition with a total of 47 seats, needing a net gain of four seats to reach 51 and flip control. The Republican Party can break a tie with the Vice President in a 50-50 situation.

Voters cast their ballots by state or district, and the results are aggregated to determine which party controls the majority in Congress.

For a crypto trading platform, a friendly regulatory stance is certainly beneficial, but doing business also requires answering practical questions: Is a certain token treated as a security or a commodity? Which agency does the platform register with? What regulations must be followed for custodial user assets?

Different answers will lead to different products and compliance costs.

Regulatory agencies can adjust policies under existing laws, while Congress can amend laws. In October 2024, Coinbase CEO Brian Armstrong mentioned in a earnings call that supporting Fairshake and Stand With Crypto is one of the highest returns on investment for the company. He believes that clearer regulations will help institutions and funds enter the market.

However, on September 15 of this year, the Senate held a final debate vote on the motion to advance the CLARITY Act, resulting in 49 votes in favor, 50 against, and 1 abstention, failing to reach the 60-vote threshold. The procedural blockage prevented the bill from entering the final vote.

One of the key issues that CLARITY aims to address is how the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) will divide regulatory responsibilities for the digital asset market. Advancing most ordinary legislation in the Senate typically requires 60 votes to end debate. This means that even if a party holds a majority, it often still needs to seek support from the other party.

The controversy is not limited to financial regulation. Republican sponsors claim that the new text has absorbed a large number of Democratic amendments and includes strict ethical restrictions; Democratic Senator Elizabeth Warren argues that these arrangements are still insufficient to constrain the president and his associated crypto business's conflicts of interest.

This also explains why "supporting the crypto industry" is not an unlimited pass. When it comes to specific terms, lawmakers will still debate and may still vote against.

Who is Funding Whom?

Bills require votes from lawmakers, and lawmakers need to win elections. The political funds from crypto companies play a role in this process.

Fairshake is one of the most representative super political action committees, with major contributors including Coinbase, Ripple, and entities and individuals related to a16z. Fairshake also has two affiliated organizations: Defend American Jobs primarily supports Republican candidates, while Protect Progress primarily supports Democratic candidates. All three belong to the same industry funding network and are not official organizations of either party.

These committees support or oppose candidates through independent activities such as advertising, without directly donating to candidates. According to the Federal Election Commission (FEC) regulations, independent expenditures cannot be coordinated with candidates, their authorized campaign teams, or related party organizations. Therefore, "spending $1 million to support someone" usually refers to activities such as advertising around the candidate.

On October 5, Fairshake announced support for 32 sitting House members, including 19 Republicans and 13 Democrats. According to the Associated Press, these lawmakers share a common trait: they all supported the House version of the CLARITY Act. Among the six who received $1 million in support, French Hill is the chairman of the House Financial Services Committee, and Bryan Steil is the chairman of the committee's Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee. These positions can influence the drafting, review, and amendment of legislation.

Outside of Fairshake, Fellowship PAC connects another group of funders. Its disclosed donations include $10 million from Cantor Fitzgerald and $1 million from Anchorage Digital Group's parent company, Anchor Labs. Fellowship PAC announced in September 2025 that it had secured over $100 million in funding commitments.

Fellowship PAC chairman Jesse Spiro also serves as Tether's head of government affairs. The donors are also connected to Tether's business: Anchorage Digital Bank issues its U.S. stablecoin USAT, and Cantor Fitzgerald is responsible for designated reserve custody.

According to The Intercept, Fellowship PAC's early expenditures primarily supported Republican candidates, but in the summer, it also invested a total of $600,000 to support Democratic incumbents Ritchie Torres, Mark Warner, and Maggie Goodlander. This political investment is also not fixed to a single party.

The advocacy organization Stand With Crypto, supported by Coinbase, participates in elections through endorsements and voter mobilization. On September 30, it announced its first three Senate candidates' endorsements: Republicans Jon Husted, Ashley Hinson, and Democrat Chris Pappas. Hinson and Pappas were both still House members at the time, transitioning to the Senate. The same announcement also added endorsements for four House candidates.

Ohio's choice is particularly striking: Stand With Crypto supports Jon Husted, while Fairshake announced in September plans to invest about $30 million against his opponent Sherrod Brown. Brown, a 73-year-old American politician, previously served as chairman of the Senate Banking Committee and has harshly criticized the risks and chaos of the crypto market. In 2022, he called for the government to promote comprehensive cryptocurrency regulatory legislation to address potential financial stability risks and enhance consumer protection.

However, Ripple co-founder Chris Larsen disagrees with this move. On October 9, he called it a "terrible decision" in a Bloomberg interview, arguing that Brown is not anti-crypto. Reports indicate that Larsen personally invested $4 million to support Brown, while Ripple has contributed $48 million to Fairshake in this election cycle. A Ripple spokesperson also stated that Larsen and CEO Brad Garlinghouse are evaluating whether to continue funding Fairshake, with the final decision resting with Garlinghouse.

What is the Current Election Situation?

Currently, the Democrats have a higher chance of regaining the House, while the Senate's outcome remains uncertain. National polls, seat-by-seat ratings, and prediction markets provide different perspectives on this election.

First, let's look at national polls. As of October 26, the average value of congressional voting intentions compiled by RealClearPolling shows: Democrats at 51.1%, Republicans at 42.8%, with Democrats leading by 8.3 percentage points. This average includes surveys conducted from October 8 to 23.

A new CBS News/YouGov poll released on October 25 also shows Democrats leading 53% to 45%; this survey was conducted from October 21 to 23.

These "national congressional voting intention" surveys ask voters which party's congressional candidates they prefer, helping to gauge the national political climate, but they cannot be directly converted into House seats. The 435 House seats must be produced in each district, and candidate performance and local election conditions are equally important.

Evaluating each district individually provides a clearer picture of the competition for House seats. As of October 26, the RealClearPolitics (RCP) House election map lists 227 seats as leaning Democratic, 183 seats as leaning Republican, and 25 seats as too close to call. According to this classification, the number of seats on the Democratic side has exceeded the 218 seats needed for a House majority. However, "leaning Democratic" is still a pre-election assessment.

The Senate situation is more complex. It only elects a portion of its seats, and even if national polls are favorable, it depends on whether these advantages can translate into the states holding elections this year. As of October 26, the RCP Senate election map, after combining un-elected seats with ratings for each election, shows 46 seats for the Democrats, 44 for the Republicans, and 10 seats still highly competitive and uncertain. States like Ohio, Maine, Iowa, Texas, and Michigan are particularly noteworthy.

Ohio, mentioned earlier, is a battleground that the crypto industry should closely monitor. In the RCP summary of surveys conducted from September 22 to October 22, Sherrod Brown leads Jon Husted 48.2% to 44.9%. Brown has an advantage, but his average support rate is still below 50%. Different surveys also show discrepancies, so it cannot be concluded that he is guaranteed victory.

Prediction markets provide another perspective. As of October 27, Kalshi shows a probability of about 90.5% for Democrats to win the House and about 64% for them to win the Senate. Polymarket's corresponding two independent contracts are approximately 92% and 66%.

These numbers reflect the probabilities indicated by market trading prices, not voter support rates. They suggest that the market has a concentrated expectation for the Democratic Party to regain control of the House of Representatives, but retains greater uncertainty regarding the Senate.

For the crypto industry, this means that attention must be paid to whether Congress will change party leadership, while also continuing to track the competition among specific candidates. Which party gains a majority will influence who controls the agenda; which lawmakers are elected will affect how much support bills can ultimately garner. Campaign ads can buy exposure, but the votes needed for legislation will still depend on the elections and subsequent negotiations.

How Will Crypto Regulations Change After the Congressional Elections?

First, who will lead the relevant legislation? The focus will be on the House Financial Services Committee, the Senate Banking Committee, and the agricultural committees of both chambers. The agricultural committees are important because they have jurisdiction over the CFTC; how the digital asset market delineates the regulatory scope between the SEC and CFTC will directly involve these committees.

The majority party typically holds the chair positions on committees, giving them greater influence over scheduling hearings, organizing bill reviews, and conducting investigations. The Senate committees will also review nominations for regulatory officials, which will then be confirmed by the full chamber. Therefore, the elections could simultaneously change three things: which bills are prioritized, which regulatory decisions are scrutinized, and which individuals enter regulatory agencies. The specific chair selections will depend on the organizational procedures of the new Congress.

Another temporal premise is that after the November vote, the current Congress will still have remaining session time. If the CLARITY Act does not become law before the end of this Congress, it will need to be reintroduced and go through the legislative process again in the next session.

Combining the current distribution of congressional seats and the progress of digital asset legislation, we can deduce the impact of the elections on the crypto industry through four scenarios.

Scenario 1: Democrats Take Both Chambers: Legislative Conditions May Be Renegotiated, Oversight May Increase

Based on existing data, this scenario has the highest likelihood. The Democrats would be better positioned to rearrange the agendas of the relevant committees. Coupled with Elizabeth Warren's previous opposition to the CLARITY Act, conflicts of interest for officials involved in crypto business, investor protection, and the scope of regulatory exemptions may all become focal points for renegotiation. For trading platforms and token issuers, while striving for clear regulatory identities, they may also need to accept more restrictions.

However, Trump remains president and retains veto power; a change in Congress does not automatically replace current officials at the SEC, CFTC, and other agencies. The Democrats can push for rule changes, but whether they can become law still depends on reaching agreements with Republican lawmakers and the White House. Overturning a presidential veto requires two-thirds support in both chambers.

Scenario 2: Democrats Take the House, Republicans Retain the Senate: The Industry Needs to Find Consensus Between the Two Chambers

House Democrats may demand adjustments to ethical restrictions, customer protections, or regulatory arrangements, while Senate Republicans may wish to maintain the core elements of the existing framework. Both chambers must pass the same text to send it to the president; if they cannot agree, the time for businesses to wait for unified rules may be extended.

Scenario 3: Republicans Retain Both Chambers: Existing Agenda Easier to Continue, but Bipartisan Negotiation Still Required

In this case, the Republicans would have better conditions to coordinate the agenda with the White House, which would be favorable for continuing to push the CLARITY Act. However, bipartisan votes in the Senate, as well as the divisions between banks, securities industries, and crypto platforms, will not automatically disappear with the elections.

Scenario 4: Republicans Retain the House, Democrats Take the Senate (Very Low Probability Event)

This scenario has an extremely low probability and can essentially be ignored. As of October 26, Polymarket assigns it a probability of only 1%. If this outcome occurs, even if the House passes industry-supported texts, the Senate could still demand modifications or refuse to advance them. In the future, when nominations requiring Senate confirmation arise at the SEC or CFTC, the government will also need to seek Democratic support.

It is worth mentioning that in the 23 midterm elections from 1934 to 2022, the president's party lost seats in the House 20 times. However, a decrease in seats does not necessarily mean that the ruling party will lose control of Congress, and there is no inherent correlation between election results and asset price trends.

Control of Congress affects the legislative agenda and negotiation space but does not determine whether a bill will inevitably pass or be blocked. Meanwhile, banks, Wall Street, and crypto firms are also vying for digital asset rules: stablecoin issuers hope to retain flexibility in product design and reward arrangements, banks worry about stablecoin revenues siphoning off deposits, and traditional financial institutions are concerned about access rules for custody, trading, and tokenized assets.

The interests of various parties are not entirely opposed, and there are also divisions within crypto firms. After the elections, Congress will still need to seek a balance between financial innovation, the banking system, consumer protection, and regulatory authority. Political funding can amplify the industry's influence but cannot eliminate these conflicts of interest.

How have the stock market and Bitcoin performed after recent elections?

Will the Market Breathe a Sigh of Relief After the Elections?

Historical data from the U.S. stock market does provide some basis. A study released by BlackRock on October 1 found that since 1970, the average total return of the S&P 500 six months after midterm elections is 14.1%, higher than the corresponding window of 5.7% in non-midterm election years.

Zooming in and adding Bitcoin, the results are not as neat.

Looking back at the midterm elections of 2014, 2018, and 2022, in 2014, the Democratic Party, led by Obama, lost the Senate, allowing the Republicans to control both chambers; in 2018, the Republican Party, led by Trump, lost the House but retained the Senate; in 2022, the Democratic Party, led by Biden, also lost the House but retained the Senate. In all three cases, the party of the sitting president lost one chamber, but the starting points and market performances were different.

Below are the price performances of the S&P 500 and Bitcoin in the 30 natural days before and after the midterm election voting:

Note: The pre-election price change compares the prices from 30 natural days before the voting day to the voting day; the post-election price change compares the prices from the voting day to the following 30 natural days. All points are taken at 16:00 New York time, with the S&P 500 using the most recent closing price when the market is closed.

In November 2018, the market believed that the core reason for Bitcoin's plunge was the hard fork of Bitcoin Cash (BCH) that triggered a "hash war," compounded by a bear market that had been ongoing for nearly a year and regulatory pressures.

In 2022, it coincided with the FTX crisis. The voting day for that year's midterm elections was November 8, and FTX suspended withdrawals on the same day, subsequently filing for bankruptcy on November 11. The election and the industry crisis occurred almost simultaneously, making it difficult to isolate the impact of the election from this market trend. Bitcoin had already been impacted by the crisis at the statistical dividing point.

These three samples can only show concurrent performances and cannot individually identify the role of the election, nor do they provide a comparison for the scenario where the president's party "retains both chambers."

The Bitcoin halving also brings another layer of cyclical coincidence: midterm elections are held every four years, and Bitcoin halving also occurs approximately every four years. The midterm election years of 2014, 2018, 2022, and 2026 are two years later than the halving years of 2012, 2016, 2020, and 2024. However, elections are held according to the statutory calendar, while halvings occur after every 210,000 blocks. The similar time intervals do not imply that prices will repeat the same trends.

For the crypto industry, the most direct consequence of the elections is changing who discusses the rules and which provisions have a chance of passing. Whether these changes can bring clearer operating conditions, attract more market participants, and ultimately reflect in prices will depend on what happens after the ballots are cast.