Crypto market tumbles as US Senate blocks digital asset regulation bill

The Digital Asset Market Clarity Act, known as the Clarity Act, has failed in the US Senate. The bill, which aimed to establish a comprehensive regulatory framework for the cryptocurrency market, collapsed after Democrats raised conflict-of-interest concerns over the vast cryptocurrency profits Donald Trump and his family have accumulated.

Bloomberg reported Tuesday (local time) that the Senate held a procedural vote that day to advance the Clarity Act to debate, but the measure fell short of the votes needed to proceed, failing 49-50.

Republicans hold 53 seats in the Senate — a majority — but advancing the bill required at least 60 votes, making Democratic support essential. Every Democratic senator voted against the measure. Two Republicans also broke ranks: Susan Collins of Maine and Josh Hawley of Missouri.

The central obstacle was Trump's and his family's cryptocurrency business interests, which critics said made the legislation appear designed to serve the president's private financial gain. Sen. Elizabeth Warren of Massachusetts, who leads the Democrats' side on the Senate Banking Committee, said in a floor speech before the vote: "Let's be clear — we should not pass a crypto bill that allows President Trump to keep raking in billions of dollars in crypto profits while working families across the country are struggling with rising prices." Sen. Mark Warner, Democrat of Virginia, also said: "We cannot pass a law for this industry while allowing the president of the United States to personally profit from it."

Republican leaders responded by unveiling an amendment that would restrict cryptocurrency issuance by Trump and other senior officials and grant state attorneys general enforcement powers. Democrats, however, demanded stricter mechanisms — including a requirement that the president divest cryptocurrency holdings once they reached a certain threshold — and the two sides failed to reach an agreement.

With the bill's collapse fueling a sense of heightened political uncertainty, bitcoin and other cryptocurrencies along with related stocks tumbled.

According to US cryptocurrency exchange Coinbase, bitcoin fell more than 5 percent after news of the Senate vote broke at 3 p.m. Eastern time, dropping to $74,911. Ether, the second-largest cryptocurrency by market capitalization, fell about 7 percent in the same period, sliding to $2,357.

Coinbase shares also declined, closing down more than 10 percent from the previous session at $172.11. Strategy, a company that holds 845,000 bitcoin, saw its share price fall more than 5 percent to close at $129.60.

Although the Clarity Act is a regulatory measure, it was widely seen as beneficial to the cryptocurrency industry because it would have clarified jurisdictional authority over digital assets whose legal status had long been ambiguous. With Congress set to enter recess ahead of the November midterm elections, the bill's defeat Tuesday is expected to make passage before year's end unlikely.