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Ahmed Barakat
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The U.S. Senate voted 50-49 on September 15 to block the CLARITY Act from advancing, falling 10 votes short of the 60 needed to clear a procedural cloture motion. The defeat leaves the bill stalled after months of negotiations aimed at building bipartisan support for a federal crypto market-structure framework.
The procedural vote was a setback for an industry seeking clearer rules for digital assets. The measure could still be reconsidered, but Congress is preparing to leave Washington ahead of the midterm election, narrowing the immediate legislative window.
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A Compromise That Wasn’t
Republican leaders released a revised version of the bill Sunday night, adding ethics restrictions intended to address Democratic concerns about public officials profiting from crypto ventures. The changes did not resolve the opposition. Democrats had expressed frustration that Republican negotiators had not met their demands concerning profits from crypto ventures connected to President Donald Trump and his family.
Tuesday’s vote was a motion to proceed rather than a final vote on the bill. Even if it had cleared the 60-vote threshold, the CLARITY Act would still have faced further Senate negotiations and votes, then needed to clear the House before reaching President Trump’s desk.
The bill itself would establish a framework for crypto, divide oversight between the SEC and CFTC, set registration requirements for digital-asset firms, and strengthen anti-money-laundering protections.
Sen. Ruben Gallego, D-Ariz., a key Democratic negotiator, said before the vote that the ethics compromise could have won support from many Democrats. He argued that Republicans were prioritizing the president’s crypto income over functional regulation, portraying the outcome as a failure of negotiations rather than an unavoidable policy dispute.
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Market Reaction After The Failing CLARITY Act
Bitcoin was down 3% following the vote. Coinbase shares were off 8%, and Circle shares fell 10% as the broader market sold off. Reuters reported that bitcoin fell more than 5% as the vote appeared on track to fail, while shares of Coinbase and Circle fell as much as 10%.
With Congress stalled, the SEC and CFTC are positioned to shape crypto policy under their existing authority. The SEC has proposed a Regulation Crypto Assets framework that would allow startups to sell up to $75 million in tokens without full registration. The CFTC recently approved the first bitcoin perpetual futures contracts in the U.S.
Need to be understood that agency action does not provide the statutory framework sought by the industry. Executives and analysts have said that only Congress can create a lasting regulatory structure, while regulations issued without legislation may be vulnerable to changing political conditions and court challenges.
Senators are scheduled to leave Washington in early October and not return until after the midterm election, which is seven weeks away. The House is set to recess even sooner, at the end of the week, reducing the near-term opportunity to revive the bill.
Sen. Cynthia Lummis, R-Wyo., a leading Senate advocate for the crypto industry, indicated before the vote that a failed procedural vote would end the push during this Congress.
The outcome could also affect campaign activity. Tuesday’s vote might pave the way for Fairshake, a crypto political action committee, to donate to candidates running against senators who voted to block the CLARITY Act. For now, the industry must look to the SEC and CFTC for interim policy action while congressional legislation remains stalled.
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