US Senate blocks major cryptocurrency bill

Shibbir Ahmed, WASHINGTON DC: The U.S. Senate on Tuesday blocked legislation that would establish a comprehensive federal regulatory framework for cryptocurrencies, dealing a major setback to the digital-asset industry and Republican lawmakers who had championed the bill. The Clarity Act failed to secure the 60 votes needed to advance, with senators voting 49-50 on the procedural measure, according to the Associated Press.

The legislation was designed to provide clearer rules for the $2.3 trillion U.S. cryptocurrency market, including defining regulatory responsibilities and establishing greater legal certainty for digital-asset companies. Crypto industry groups had strongly backed the measure and spent hundreds of millions of dollars lobbying for its passage.

Democrats opposed advancing the bill without stronger restrictions concerning President Donald Trump and his family’s financial interests in cryptocurrency. Trump and his family have significant business interests in the sector, including World Liberty Financial and a cryptocurrency meme coin.

Republicans had revised the legislation in an effort to address those concerns. The revised version included provisions giving state attorneys general greater enforcement authority and requiring public officials with significant interests in crypto-related companies to divest those interests or place them in blind trusts. Democrats argued that the changes did not go far enough.

The bill also faced concerns from the banking industry over provisions involving stablecoins, which allow certain digital tokens to maintain a value linked to traditional currencies. Banking groups warned that stablecoin rewards could encourage customers to move deposits away from banks and potentially affect lending.

The Senate’s action represents a significant setback for the cryptocurrency industry’s effort to secure its first comprehensive federal regulatory framework. Reuters reported that the legislation now faces limited prospects for revival in the near term, particularly with Congress approaching the November midterm elections and a recess.

Financial markets reacted to the Senate vote. Bitcoin fell about 4% to around $75,908, while shares of cryptocurrency companies Coinbase and Circle each declined roughly 9%, according to Reuters.

The Securities and Exchange Commission and Commodity Futures Trading Commission have meanwhile continued developing cryptocurrency-related rules, but industry participants have argued that legislation from Congress is needed to provide a more permanent regulatory framework.