A landmark bill to regulate cryptocurrency markets collapsed in the Senate on Tuesday, falling short in a procedural vote after negotiations over ethics restrictions tied to President Trump's personal crypto holdings broke down in the final stretch.
Bitcoin and crypto-linked stocks slid within minutes of the result, as crypto prices tumbled and exchange shares fell in the market's immediate reaction to the vote.
The Digital Asset Market Clarity Act failed on a 49-50 vote, well short of the 60 needed to advance past a filibuster in the 53-47 Senate. The bill would have assigned clear regulatory roles across federal agencies and given the Commodity Futures Trading Commission new authority to oversee crypto spot markets, a structure the industry has sought for years as a substitute for the current patchwork of state rules and SEC enforcement actions.
Ethics provisions sank the deal
Talks broke down primarily over provisions meant to limit senior government officials' crypto holdings. Democrats pushed for language requiring the president or future presidents to divest crypto assets above a certain threshold, citing Mr. Trump's expanding personal stake in digital-asset ventures since taking office. Negotiators exchanged a counteroffer on stricter enforcement language, but a final agreement did not come together before the vote, and several Republicans also broke ranks to oppose the bill, leaving it without even a simple majority.
Senator Cynthia Lummis of Wyoming, one of the bill's leading Republican sponsors, urged colleagues to back the measure ahead of the vote.
"Let's vote yes. Let's not only join the 21st century economy... Let's lead it."
Sen. Cynthia Lummis (R-Wyo.)
Regulators left to fill the gap
With legislation stalled, attention now shifts back to federal regulators. The Securities and Exchange Commission has proposed its own framework, tentatively named Regulation Crypto Assets, and is moving to approve narrower rules on tokenized securities. SEC Chair Paul Atkins has cautioned, however, that any rules written by the agency alone would lack the durability of statute and could be reversed by a future commission. Industry-aligned groups, including the crypto super PAC Fairshake, are expected to weigh how senators voted on the bill as they plan spending ahead of the November 3 elections, a sign the fight over crypto regulation is far from settled even after Tuesday's defeat.
Senate leaders have not said whether they will attempt a revised version of the bill before year's end. Aides in both parties said a narrower measure focused solely on stablecoins, rather than the full market-structure overhaul, could have a better chance of passing if lawmakers return to the issue after the midterm elections.
