US Senate Rejects Clarity Act, Bitcoin Drops 3%

The Clarity Act has ultimately been rejected. [Photo: Shutterstock]

According to CNBC, the U.S. Senate failed to reach the required 60 votes for the Clarity Act to advance, with a procedural vote of 50-49 on Thursday (local time). This marks a significant setback for the cryptocurrency industry's push toward comprehensive market structure regulation.

Despite months of bipartisan negotiations, the bill stalled in Congress. Republican leadership introduced an amendment on Tuesday adding ethics rules restricting public officials' crypto business earnings, but it did not sway opposition.

Democrats had long demanded stricter handling of former President Donald Trump and his family's cryptocurrency business earnings. Key Democratic negotiator Senator Ruben Gallego stated that the previous compromise was a morally acceptable deal that could have secured many Democratic votes, criticizing Republicans for prioritizing presidential earnings over regulation.

Markets reacted immediately: Bitcoin prices fell 3%, while Coinbase and Circle shares dropped 8% and 10%, respectively.

The Clarity Act aimed to establish a framework for cryptocurrency regulation, dividing oversight authority between the SEC and CFTC, setting registration requirements, and strengthening anti-money laundering measures.

Even if the procedural vote had passed, the legislation would not have been finalized immediately. The bill required further negotiation and voting within the Senate, followed by passage in the House before reaching President Trump's desk. Senator Cynthia Lummis, a prominent cryptocurrency supporter in the Senate, warned that failure of this procedural vote would mean the end for the bill.

The rejection now leaves the industry waiting for clearer regulations until next year. Some in the sector are placing hope on regulatory agency actions instead of congressional legislation. The SEC has proposed allowing startups to sell up to $75 million in tokens without registration, and the CFTC recently approved the first U.S. Bitcoin perpetual futures.

With midterm elections just seven weeks away, lawmakers will leave Washington early next month for election campaigns, making further legislative progress unlikely before then. The vote also sets a potential precedent for political action committees like the Crypto Political Action Committee (CPAC) to support candidates opposing Clarity Act supporters in upcoming races.