Senate Blocks Major Crypto Bill

Senate Republicans on Tuesday failed to secure enough votes to invoke cloture and open floor debate on a sweeping cryptocurrency bill.

The Digital Asset Market Clarity Act—legislation that would establish a comprehensive regulatory framework for cryptocurrencies and other digital assets—has been stuck in the Senate for months.

Cleared by the Banking Committee in May, the bill has stalled on the floor as leaders struggle to assemble the 60 votes needed to end the debate and move it toward final passage. At least seven Democrats were necessary to avoid the filibuster.

The upper chamber voted 49–50 against the motion.

At the last moment, Sen. Thom Tillis (R-N.C.) changed his vote from “yea” to nay.”

Sen. Cynthia Lummis (R-Wyo.), one of Washington’s biggest crypto advocates, said the Clarity Act is not a partisan bill, noting that Democrats secured more than 100 separate concessions and accounted for half of the bill’s 630 pages.

Lummis said those opposing the legislation were doing the United States a disservice.

“It’s a vote against the consumer protections American families are counting on,” Lummis said on the Senate floor shortly before the vote.

“It’s a vote to hand the future of financial innovation to a foreign competitor, who will not be foolish enough to waste this chance to lead our global digital economy and onshore this industry and the good-paying jobs it creates.”

Senate Majority Leader John Thune (R-S.D.) urged his colleagues to proceed with the motion, citing the legislative body’s bipartisan approval of last year’s GENIUS Act.

“It would provide clear rules of the road while encouraging innovation to happen right here in America,” Thune said on the Senate floor.

Democratic lawmakers and the banking industry had requested a series of changes.

For months, several Democratic senators have demanded enhanced ethics language to prevent the president and his family from profiting on crypto.

“While Americans across the country suffer from an affordability crisis, this bill will turbocharge President Donald Trump’s ability to rake in billions and billions of dollars from crypto,” Sen. Elizabeth Warren (D-Mass.) said on the Senate floor on Sept. 14.

Banks say they cannot support the legislation unless it includes a remedy to curb interest-style payouts on stablecoins. They warn these payments could persuade clients to transfer their traditional bank deposits into higher-yield crypto accounts.

‘Long Way to Go’

Prior to the vote, Senate Republicans released updated text that they say responds to these requests.

The legislation now includes a provision allowing state attorneys general to impose ethics requirements on federal officials. This inclusion received the president’s endorsement, according to Lummis.

“After a year of intense daily bipartisan negotiations, this bill is ready,” Lummis said in a Sept. 14 statement. “President Trump voluntarily agreed to unprecedented ethics restrictions, holding every federally elected official, judge, and their spouses to some of the toughest ethics restrictions in U.S. history.”

Meanwhile, the latest draft includes a compromise on stablecoin yields. It instructs the Treasury Department to rein in reward payments if deposit flight from community banks occurs on a significant scale, triggering a “circuit breaker.”

A group of eight banking associations noted that while it might be a step in the right direction, the latest update “is not a safeguard at all.”

“The inclusion of a deposit-flight ‘circuit breaker’ is an acknowledgment that shifting deposits from regulated financial institutions into payment stablecoins can threaten credit availability and create broader economic consequences,” they wrote in a Sept. 14 letter.

“Further technical refinements are needed to ensure that the text clearly and directly prohibits interest-like payments on payment stablecoins.”

While the vote failed, lawmakers could revive the legislation in an amended form. But it’s unclear whether they would have enough time to revise the bill and push it through before Congress adjourns.

In the end, the latest effort was the “first step” in a long process to pass the Clarity Act, said Sen. Bernie Moreno (R-Ohio).

“We have a long way to go on Clarity,” Moreno told reporters on the eve of the vote.

“That’s why, to me, it’s such an easy vote. I don’t think anybody should be concerned about a vote that says I decided to vote to end debate and consider this bill.”

Brace for Market Impact

Prediction markets had been skeptical that the Clarity Act would pass.

Heading into the vote, Polymarket indicated a 16 percent chance the bill would be signed into law this year.

“The crypto market is still positioned for it to fail, so the risk into Tuesday is to the topside,” Jesse Marre, senior portfolio manager at Hilbert Group, said in a note emailed to The Epoch Times.

“The Republicans have moved a long way towards what the Democrats were asking for and are calling this their last and final offer. What remains is whether this becomes a party political vote.”

Bitcoin prices have struggled to maintain momentum since reaching $80,000 last month, the first time since May. The chief cryptocurrency fell almost 3 percent before the vote, sliding below $77,000. Ether, the second-largest cryptocurrency, declined 4 percent to below $2,500.

This week’s outcome will prove to be the next catalyst for bitcoin.

“If forced to pick, the risk from this week’s events is to the topside, so the question is whether we get a breakout through $82,000,” Marre said. “Above $85,000, the market is probably back in bull territory and looking for $100,000.”