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The U.S. Senate rejected the Digital Asset Market Clarity Act in a 49-50 procedural vote on Tuesday, falling 11 votes short of the 60 needed to advance. Four Republicans joined nearly all Democrats in opposition. The bill would have established a regulatory framework dividing oversight between the SEC and CFTC. Democratic opposition centered on ethics provisions they argued failed to prevent President Donald Trump from profiting from his crypto holdings, which generated more than $1.4 billion in income in 2025. The banking lobby also opposed stablecoin rewards provisions. Crypto prices fell following the vote, with XRP dropping nearly 10% and Bitcoin slipping almost 3%. Industry groups say they will continue advocating for legislation, though prospects this Congress are dim.
Key Elements
The U.S. Senate dealt a stinging defeat to the cryptocurrency industry on Tuesday, refusing to advance sweeping market-structure legislation that had consumed years of lobbying effort and more than $300 million in campaign spending. The 49-50 procedural vote against the Digital Asset Market Clarity Act all but extinguishes the bill’s prospects in this Congress and lays bare the limits of an industry that had grown accustomed to winning in Washington.
The bill needed 60 votes to clear the procedural hurdle and move toward a floor debate. It fell 11 short, with four Republicans joining nearly every Democrat in opposition. The vote was technically procedural, but lawmakers on both sides acknowledged it was a litmus test the legislation could not survive.
For crypto companies seeking clear rules on whether their products fall under securities or commodities law, the outcome is a significant setback. The Clarity Act would have divided regulatory authority between the Securities and Exchange Commission and the Commodity Futures Trading Commission, giving the CFTC new oversight of crypto spot markets for the first time.
The industry’s political machinery, which helped elect a crypto-friendly White House and pushed the GENIUS Act for stablecoin issuers into law last year, ran headlong into two forces it could not overcome: Democratic fury over President Donald Trump’s personal crypto dealings and a well-organized banking lobby determined to protect its deposit base.
Democrats who might otherwise have supported a market-structure bill found themselves unable to vote for legislation they said failed to adequately restrict the president’s ability to profit from the very market his administration would oversee. Trump reported more than $1.4 billion in income from his family’s crypto ventures in 2025, and companies managing his interests in World Liberty Financial and the Trump memecoin project held at least $160 million in Bitcoin and Ether at the end of that year, according to a review of his disclosures.
“The president should not be able to use the power and influence of his office to benefit his own crypto holdings while his administration makes decisions that could directly affect their value,” said Senator Mark Warner, a Democrat who worked on the bill’s illicit-finance provisions and said he had wanted to vote yes. “At a minimum, any serious crypto legislation must include meaningful ethics requirements that prevent the president and other senior government officials from profiting off the policies they oversee.”
The White House did agree to ethics concessions, including a second batch of changes over the weekend. But Democrats said the provisions still fell short of preventing conflicts of interest for the president and other senior officials.
The political dynamics around crypto have shifted in ways that made it easier for Democrats to resist the industry’s pressure managing director at Capital Alpha Partners. “The politics here changed slightly in a way that made it less difficult for the Democrats to vote against it,” he said. “I think they feel like maybe they don’t need to fear the crypto lobby and campaign money as much as they have.”
Brian Gardner, chief Washington policy strategist at Stifel, framed the challenge in starker terms. “For the political left, crypto has almost become… very tied to Trump personally, and that makes it too hot to touch for many Democrats,” he said.
The final days before the vote were marked by bitter recriminations from both parties. Senator Cynthia Lummis, the retiring Wyoming Republican who had worked on the bill for more than five years, said Democrats had not moved from their opening position. After the vote, she accused them of being “anti-American” and said she had negotiated “in good faith” while Democrats “played games.”
Democrats offered a mirror-image account. Senator Ruben Gallego of Arizona, a key negotiator on ethics provisions, said Republican leadership ended talks while progress was being made. “Just as Democrats and Republicans were making progress to address ethics concerns, Republican leadership ended talks and forced a vote,” he said. “They were never serious about bipartisan negotiations.”
Senate Minority Leader Chuck Schumer echoed that version of events. “There was a bipartisan deal on the table as recently as this afternoon to resolve all outstanding items including ethics,” he told reporters. “Republican leadership walked into the room, broke up the bipartisan discussion and said, ‘No, we’re done’ and killed it.”
Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee and a persistent critic of the industry, said the weekend version of the bill “was not negotiated with the Democrats” and characterized the changes Republicans made as “nonsense.” On the Senate floor, she said the legislation “will turbocharge Donald Trump’s unprecedented corruption.”
The banking industry mounted its own campaign against a provision that would have allowed stablecoin rewards programs to function like interest-bearing deposit accounts. Community bankers across the country argued the language would create unregulated competition for deposits and hurt lending. That opposition peeled off at least one Republican, Senator Josh Hawley of Missouri, who had said last month he would oppose the bill over the issue.
The banks’ national network proved a match for the crypto industry’s political operation. The American Bankers Association and its allies had made clear on Monday that the final Republican version of the bill had not addressed their concerns.
Coinbase CEO Brian Armstrong had earlier walked away from the bill over its treatment of stablecoin rewards, a move that helped stall momentum when the legislation was moving through the Senate Banking Committee. That delay pushed the process deeper into election season, where bipartisan cooperation becomes harder.
The legislative failure rippled through crypto markets. In Wednesday morning trading in Asia, XRP dropped nearly 10% to $1.30, Ether fell almost 5% to around $2,410, and Solana declined 5% to just above $97. Bitcoin slipped almost 3% to a little under $76,000, its biggest daily percentage decline since June.
The industry’s legislative options are now severely constrained. A “lame duck” session after the November midterms could theoretically revive the bill, but that path faces long odds. Democrats are favored to retake the House, which would put crypto legislation under Democratic committee chairs. The Senate race remains too close to call.
House Agriculture Committee and House Financial Services Committee chairmen issued a joint statement saying they would continue supporting congressional action while partnering with federal financial regulators in the interim. “Until statutory certainty is achieved, we look forward to partnering with the federal financial regulators as they utilize existing authorities to develop rules and issue guidance governing digital assets,” they said.
White House crypto adviser Patrick Witt said the SEC and CFTC both have “robust” regulatory agendas for crypto rules. “They’ve got a job to do one way or the other,” he said at an industry event on Monday. “There’s still good news coming for the industry.” But SEC Chair Paul Atkins has acknowledged that agency rules need statutory backing to be permanent, and the CFTC lacks direct authority over crypto commodity spot markets.
The industry’s political operation faces its own strategic questions. Fairshake, the leading crypto super PAC, has not yet set its final election strategy and has not briefed anyone outside the organization on how it will deploy more than $100 million in campaign cash, according to a person familiar with the planning.
Some industry advocates say the fight will continue regardless of Tuesday’s outcome. “The industry is going to continue to advocate for pro-crypto policy,” said Kevin Wysocki, head of policy at Anchorage Digital. “That means supporting pro-crypto candidates, whether they’re on the left, right, in the center.”
Stand With Crypto, the advocacy group backed by Coinbase, has been building a national movement around crypto voters. Its director, Mason Lynaugh, said in a statement after the vote that it was now clear which lawmakers “are against us,” and that members would vote accordingly.
But polling suggests crypto policy is not a priority for most voters. An April Politico poll found just 18% of respondents wanted lawmakers to prioritize crypto rules, far behind issues like affordable housing at nearly 50%. Warren pointed to primary results as evidence that crypto money has its limits. “Candidates who had a lot of crypto money still didn’t make it,” she said. “The American people like to hear from a candidate who says, ‘I can’t be bought.'”
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Source: finance.biggo.com