US Senate Blocks Comprehensive Crypto Bill, Bitcoin Plunges Over 5%, Crypto Stocks Tumble

Bitcoin and cryptocurrency-related stocks continued to decline on Tuesday (15th), following the US Senate's failure to advance the comprehensive cryptocurrency regulation bill, the CLARITY Act, dealing a significant blow to the digital asset industry and Republican lawmakers who have long supported the legislation. Bitcoin briefly fell over 5%, marking its largest single-day drop since June, while Coinbase (COIN-US) and Circle Internet Group (CRCL-US) saw intraday declines reach up to 10%.

By late Tuesday, Bitcoin's losses had narrowed to around 4%, trading at $75,908; Coinbase and Circle Internet Group each fell approximately 9%, indicating that markets quickly reflected the negative impact of the bill's setback on the cryptocurrency industry's regulatory outlook.

The US Senate voted 50 in favor and 49 opposed in a procedural vote, falling short by 10 votes of the 60-vote threshold required to move forward major legislation. Four Republican senators — Jerry Moran, Rand Paul, Josh Hawley, and Thom Tillis — joined all Democratic senators in voting against the motion, temporarily stalling the bill. Tillis initially voted in favor but later switched to oppose during a procedural maneuver to preserve the possibility of reintroducing the bill in the future.

This vote outcome significantly raises the difficulty of passing the bill during the remainder of Congress’s current session. The US Congress is expected to leave Washington this month ahead of the November midterm elections, where Republicans are striving to maintain control of both the House and Senate. With elections occupying most lawmakers’ political attention, time left for Congress to negotiate cryptocurrency legislation is extremely limited.

Republican lawmakers only unveiled the revised version of the bill text on Sunday night, attempting at the eleventh hour to address concerns from the banking sector and some Democratic members, but the new content still failed to secure sufficient support. The CLARITY Act originally aimed to establish a complete regulatory framework for digital assets, clearly defining the legal status of tokens, determining which regulatory bodies would oversee different crypto assets, and imposing additional compliance requirements on cryptocurrency businesses.

The cryptocurrency industry has long argued that the lack of clear regulatory rules in the US makes it difficult for companies to determine their legal standing and limits further industry development. To push for the CLARITY Act, well-funded crypto industry players have spent hundreds of millions of dollars on lobbying and political activities, hoping to establish a clearer legal framework so that exchanges, token issuers, and other digital asset operators can function under a more stable regulatory environment.

However, Democratic lawmakers, some Republicans, and banking industry representatives still have major concerns about the bill’s content, particularly regarding anti-money laundering and conflict-of-interest safeguards. The bill includes a provision banning government officials from operating their own cryptocurrency businesses — a rule that implicates former President Donald Trump, who reported over $1.4 billion in income last year from his family’s cryptocurrency ventures. Democratic lawmakers have demanded stronger provisions, including granting state attorneys general greater enforcement authority to take legal action if they believe the Department of Justice is not enforcing adequately.

Trump has actively supported the cryptocurrency industry and the CLARITY Act, urging Congress to pass the bill. During his 2024 campaign, Trump aggressively sought financial backing from the crypto industry and has dubbed himself the “crypto president.” However, Democrats have questioned potential conflicts of interest due to the Trump family’s ownership of cryptocurrency businesses, further complicating negotiations over the bill.

The US Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) may now be forced to fill the regulatory gap left by congressional inaction. However, industry experts note that only Congress can create a long-term, stable crypto regulatory framework. Relying primarily on executive agencies to set rules means policies could change with the political climate and face court challenges, leaving crypto businesses in ongoing regulatory uncertainty.

The Trump administration has recently rolled back dozens of policies introduced under President Biden’s tenure at the SEC and consumer protection agencies, highlighting the fragility of administrative regulation. Industry players argue that if the CLARITY Act does not become law, future regulatory policies could shift dramatically with changes in government, increasing risks for corporate investment and business planning.

Another major point of contention in the bill involves whether cryptocurrency exchanges and other digital asset operators can offer rewards to customers holding dollar-pegged stablecoins. The banking industry strongly opposes such arrangements, arguing that if crypto platforms can attract bank deposits through rewards, funds could flow out of the banking system into crypto platforms, weakening banks’ lending capital base.

Cryptocurrency firms argue that a full ban on stablecoin rewards would be anti-competitive. Some Republican senators also stated they would not support the CLARITY Act unless stronger safeguards for community bank deposits were included. Rebeca Romero Rainey, CEO of Independent Community Bankers of America, said the banking industry will continue pushing Congress to amend related provisions and warned that deposit outflows could pose risks to the banking system.

This failed vote represents a serious setback for the cryptocurrency industry’s months-long effort to drive major legislative change. Before the August recess, the Senate had postponed the bill’s vote to September 15, with Republican leaders hoping to use the brief window after reconvening in September to advance the legislation. However, analysts and lobbyists had already considered the chances of success low due to Democratic opposition, banking pressure, ethical regulation disputes, and the approaching November midterms.

After the Senate reconvened on September 14, there were only 14 working days before entering the October election recess, with the remaining annual agenda crowded by other major bills like defense and government funding. If the CLARITY Act fails to pass this year and is pushed into 2027, next year’s election results could further alter the congressional political landscape, making the bill’s prospects even more complex.

For the cryptocurrency market, the CLARITY Act’s failure means the timeline for regulatory clarity that investors had hoped for has been delayed again. Bitcoin plunged over 5% as news of the failed vote became clearer, while Coinbase and Circle shares hit maximum intraday drops of around 10% before slightly recovering. Market reactions show that investors now view the US’s ability to establish a long-term, stable, and industry-friendly regulatory structure as a key factor affecting cryptocurrency company valuations.

With congressional legislation temporarily stalled, US cryptocurrency regulatory policy may rely more on the SEC and CFTC in the short term. However, without congressional legislative backing, regulatory rules may be more vulnerable to political shifts and judicial litigation. For crypto operators, what was once seen as a chance to establish long-term industry rules now faces an extended period of policy uncertainty.