The Associated Press projected Democratic control of the chamber late Tuesday, and Cynthia Lummis's Wyoming seat went to Harriet Hageman. Elizabeth Warren, the Banking Committee's ranking Democrat, called the market structure bill dead on arrival in July.
Democrats have retaken control of the US Senate, the Associated Press projected late on Tuesday, after Josh Turek's win in Iowa supplied the seat that settled the chamber. Al Jazeera, reading the same projection, put the Democratic total at 51 seats or more with a handful of races still being counted. The House has not been called. The AP copy carried by PBS NewsHour, filed at 11:46 p.m. Eastern on Tuesday, described that chamber as too early to call with Democrats seven flips in and three short of a majority, and a Forbes live blog running the same race calls still reported no House call when it last updated at 12:01 a.m. Eastern.
For crypto legislation the result changes nothing this week and a great deal in January. The CLARITY Act, which would define how federal agencies divide authority over digital assets and give the CFTC new jurisdiction over crypto spot markets, has been sitting in the Senate since September 15, when cloture on the motion to proceed drew 49 votes against 50 and fell eleven short of the 60 it needed.
That vote happened in a Senate where Republicans held 53 seats, and the arithmetic was never close: even assuming every Republican voted yes, seven Democrats had to cross, and the 49 recorded in favor came in below the majority's own seat count. The provision in dispute was not market structure. It was an ethics restriction on senior officials and their spouses issuing tokens, and CoinDesk reported that late disagreement over those provisions was described as unbridgeable after negotiators had produced more than 600 pages of compromise text.
The senators elected on Tuesday take their seats when the new Congress convenes on January 3. Until then the current Senate stays in session, and that is the whole of the window the bill has in the chamber as it is presently composed. Cynthia Lummis, the Wyoming Republican CoinDesk identified as the leading Republican negotiator on the bill, will not sit in the next one. AP called her seat for Harriet Hageman, who won the place Lummis is vacating.
The Banking Committee is where the Senate text was written, and its ranking Democrat is Elizabeth Warren. The committee's own minority newsroom published her position on July 22, when a new version of the text appeared: "This bill should be dead on arrival." Her objections ran to enforcement rather than classification. The statement argued that the Justice Department charged with enforcing the bill answers to a presidential appointee while state attorneys general are "explicitly prohibited from bringing any enforcement actions," and that the underlying bill "still fails to adequately protect investors, our financial system, and our national security."
Whether Warren takes the gavel is not settled by the election. Committee leadership is assigned by the majority caucus rather than by seniority alone, and no caucus has met. The Defiant reported on Wednesday morning that she is positioned to take over Banking, attributing that to itself rather than to a named source. What the election does establish is narrower and firmer: the gavel passes to the caucus whose ranking member on that committee published that verdict in July.
CoinDesk noted in September that Maxine Waters could chair House Financial Services if Democrats won the House. That chamber has not been called, so it remains a conditional rather than a result.
The other route to federal crypto rules survives the election, because it does not run through Congress. The CFTC published an advance notice of proposed rulemaking in the Federal Register on October 13 under RIN 3038-AF80, with comments closing on December 14. An advance notice is not a proposed rule. The Commission is recording an intention to write one and asking questions first, and a proposal, if it follows, would carry its own text and its own comment period.
That route has a weakness the industry named itself. Market participants told American Banker that rules adopted this way may lack the permanence of legislation and could be changed by a future administration. A statutory division of labor between the SEC and the CFTC would be durable in a way that an agency's reading of section 2(c)(2)(D) of the Commodity Exchange Act is not.
The agency is meanwhile using the authority it already has. On Tuesday the CFTC cleared single-stock perpetual futures, and a coalition of market groups asked a federal court the same day to suspend the clearance. Neither that product nor the litigation over it depends on the composition of the Senate.
What the next Senate does with crypto legislation depends on a caucus that has not assigned its committees and a chamber whose membership is not final. What Tuesday established is narrower: the bill's leading Republican negotiator is leaving the Senate, the committee that drafted the Senate text changes hands on January 3, and the rulemaking that continues either way closes its comment period on December 14.
