Bitcoin, the largest cryptocurrency, added to earlier losses to drop as much as 5.3% to $74,910, after the bill failed to garner the 60 votes needed to advance. Ether also declined, falling more than 8% at one point, while some smaller tokens lost even more on a percentage basis. Both declines were the largest since June on an intraday basis for the two main tokens.
The blow adds fresh momentum to a selloff that has already pushed digital assets into one of their bleakest stretches in years. For months, the industry had looked to friendlier regulation as a possible turning point, with the Clarity Act promising rules that could draw crypto further into the financial mainstream.
But the bill’s defeat has left that payoff elusive and exposed a more immediate problem: Washington can bring institutional legitimacy to the asset class, but it cannot force investors to embrace the volatile asset en masse.
“The failure to advance the Clarity Act prolongs a regulatory gap that has real consequences for where companies build, where capital is deployed, and how quickly institutional adoption moves in the US,” said Ayesha Kiani, chief operating officer at Monarq Asset Management.
From Bitcoin to Coinbase Global Inc. and other companies focused on the industry, assets that have rallied on the prospect of regulatory progress are again being driven lower at a time of growing anxiety over rising interest rates and tightening liquidity. Many crypto-market-watchers had this week already pointed to the prospect of higher interest rates weighing on risk assets.
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Shares of Coinbase closed 10% lower. Circle Internet Group Inc. fell 11%, while Strategy Inc. declined 5%.
“Wish it hadn’t happened, but the beat goes on,” said Eric Jackson, founder and CIO of EMJ Capital. He added that his firm’s internal models are still flashing bullish signals for Bitcoin.
Senators from both parties blocked the landmark digital asset market structure bill in a procedural vote, with Democrats citing continued concerns over ethics provisions meant to address President Donald Trump’s crypto business interests.
The bill would have given the Commodity Futures Trading Commission primary authority to regulate the digital assets industry. It needed 60 votes to advance and failed on a vote of 49-50.
The defeat is a major blow for crypto industry players who have invested hundreds of millions of dollars and years of effort in securing favorable, durable rules from Congress. It also comes less than two months before the midterm elections.
Senate GOP leaders had released an updated version of the so-called Clarity Act late on Sunday night with changes that included new measures to expand state attorneys general’s ability to enforce the ethics provisions. That proposal also added provisions to further limit crypto companies from offering rewards or interest to stablecoin users.
Both issues have been among the most significant hurdles to passing the bill before lawmakers turn their eyes to the midterm elections in November.
Nearly $300 million in bullish bets on crypto assets were liquidated during the final hour before voting, accelerating the flush-out of leveraged long positions in the futures market, according to data from CoinGlass.
“Market structure legislation is done for 2026, and the next realistic window is a new Congress,” said Jasper De Maere, an over-the-counter trader at Wintermute.
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