Former President Donald Trump decisively won a second term, carrying all seven battleground states and the popular vote. Republicans will also likely control both chambers of Congress, though a number of races remain uncalled.
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Senate: Republicans regained control of the Senate, where they will likely hold a 53-47 majority.
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House: Republicans are expected to maintain control of the House by a slim margin of two to six seats.
We will be sending out more detailed briefings on policy and personnel, but let’s start with some core takeaways for the innovation ecosystem:
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Unified Republican government unlocks governing tools: Republican control in the House and Senate will allow the president-elect to more easily implement his agenda. Trump will have an easier time advancing his nominees through the Senate, and his regulators will face less scrutiny from a sympathetic Congress. But the majority is thin; legislating will be hard and require bipartisan support to clear the 60-vote threshold in the Senate. The exception: tax reform. Unified control means the Republicans can use budget reconciliation to lower the Senate vote threshold to a simple majority for tax and spending bills. That is a smaller universe of policy matters, but it will matter on tax.
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Tax reform is coming, and it will affect the innovation ecosystem. At the end of 2025, a large portion of the Tax Cuts and Jobs Act provisions expire, resulting in a ~$4.5 trillion tax increase affecting over 60% of Americans. Congress will need to do tax reform, and do it with a budget that is on track to be double the 50-year historic average (6.7% v. 3.7% of GDP).
The debate will focus on the headline issues—corporate rate, individual rate, SALT, and others—but it will not end there. Provisions key to the innovation economy will come under scrutiny. Even though Republican policymakers may be amenable to the underlying policy, they will need to pay for other tax cuts and spending, so things like carried interest treatment and the qualified small business stock (QSBS) exemption may come under pressure. Carta is making the case that these provisions drive capital and talent to the innovation ecosystem, which is an economic engine, job creator, and competitive edge for America. More on what Carta and its partners are doing shortly…
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SEC agenda indexes toward capital formation. The increased scrutiny on private funds and private capital we saw in the SEC under Chair Gary Gensler will ease in the new administration. In addition to rolling back large swaths of Gensler’s agenda, a Trump SEC is expected to focus on unlocking access to capital and expanding investment opportunities. Capital formation efforts will also be a priority in a Republican-led Congress, and policies to expand accredited investor on-ramps and venture capital fund parameters could make it over the finish line.
But given the growth of private capital, do not expect scrutiny to completely go away, especially over the long-term. Even in the absence of a more aggressive regulatory agenda, the SEC’s examination and enforcement arm will likely continue to be active. New anti-money laundering requirements for venture capital and private fund advisers will also be coming online, giving the agency additional reason to look at private fund advisers.
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Regulatory framework for crypto. Crypto played a major role in the 2024 election, and pro-crypto initiatives will dominate the financial services policy agenda in 2025. Congress is expected to advance legislation to define a regulatory framework for digital assets and stablecoins and potentially roll back aspects of the crypto tax regime. New SEC leadership is expected to reverse course on the aggressive enforcement posture taken by Gensler, and ongoing litigation for non-fraud claims may be dismissed. The agency is expected to take a more collaborative posture toward working with the industry—that includes guidance and actions to exempt crypto from certain securities regulations to enable the innovative technology to operate in the market and better inform the appropriate regulatory framework.
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Antitrust scrutiny will soften, but will not go away. The new administration may not pursue antitrust enforcement as aggressively as under Biden, but do not expect it to turn back the page entirely. Both parties have embraced a more expansive antitrust enforcement framework (including VP-elect J.D. Vance), particularly as it pertains to Big Tech and artificial intelligence. That said, a more accommodative antitrust posture and less scrutiny around horizontal and vertical reviews that have started to impact private equity roll-ups and acquisitions could support M&A activity, which could help on company exits. But do not assume it reverts back to the hands-off approach that existed in pre-Biden days.
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Engagement matters. Elections matter, but that is the start. The real work is governing. And that will be done by those that engage, advocate, and inform. This is an opportunity to help shape the future of private capital infrastructure and ensure it continues to be the driving economic and innovative force.
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