U.S. Senate blocks crypto market structure bill after ethics dispute

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Senate blocks crypto bill

Highlights

U.S. Senate blocks the Clarity Act crypto market structure bill with a 49-50 vote after Democrats demand stricter Trump and stablecoin rules.
Bitcoin falls 3 percent post-vote and is down 35 percent year-on-year, reflecting sector uncertainty after over a year of record crypto lobbying.
The failed bill highlights deepening conflict between crypto and banks over stablecoin yields and raises concerns about U.S. influence versus Brussels and Beijing.

Senate vote derails digital asset framework

As first reported by Financial Times, the Clarity Act fails to advance in the U.S. Senate after Democrats push for tighter limits on Trump’s ability to profit from crypto businesses and seek stronger rules around stablecoins. The measure receives 49 votes in favor and 50 against, well short of the 60 needed to move forward.

Democrats object in part because Trump reports earning more than $1bn from his crypto businesses last year, turning ethics into a central issue in the negotiations. Ruben Gallego, a Democratic senator from Arizona involved in the talks, says the legislation fails because Republicans refuse to break with the president.

The bill is designed as a first-of-its-kind market structure framework for digital assets, and the industry sees it as a way to avoid the tougher regulatory approach pursued during the Biden administration. The White House concedes some, but not all, of Democrats’ demands before the vote, leaving the measure without the bipartisan backing it needs.

Lobbying setback hits crypto and banking debate

The result marks a major setback for crypto companies that spend more than a year negotiating and committing record lobbying sums to secure a favorable structure from the Republican-controlled Congress. With Democrats expected to gain more political power in November’s midterm elections, the sector now faces a more uncertain policy environment in Washington.

Bitcoin falls 3 percent after the vote, and the token is down 35 percent over the past year as retail investors shift attention toward volatility in AI stocks and broader equity markets. Kristin Smith of the Solana Policy Institute says pro-crypto groups are likely to keep pressing for the Senate to reconsider the bill, while companies also look to securities and derivatives agencies for regulatory clarity through rulemaking.

The bill also exposes a widening clash between crypto advocates and the banking industry over whether stablecoin issuers should be allowed to offer yield to customers. Banks argue that such payments could drain deposits and weaken lending, especially at community banks, while crypto supporters reject that view and warn the failed vote risks ceding global standard-setting influence to Brussels or Beijing.

Our earlier coverage of the Senate’s failed procedural vote on the CLARITY Act explained how the setback kept pressure on Congress to deliver a clear market-structure framework for digital assets. We noted that House leaders argued only new legislation can provide lasting legal certainty for consumers and businesses, while regulators will continue relying on existing authority to issue guidance as the policy debate plays out.

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