Senate Blocks Crypto Market Structure Bill, Triggering Sharp Selloff Across Digital Assets

The U.S. Senate on Tuesday failed to advance the Digital Asset Market Clarity Act, a sweeping regulatory framework for cryptocurrencies, in a procedural vote that immediately roiled digital asset markets and effectively killed the legislation’s chances before November’s midterm elections.

The cloture motion to proceed to H.R. 3633 received 49 votes in favor and 50 against, falling six votes short of the 60 needed. Every Democrat present voted no. Three Republicans joined them: Sens. Susan Collins of Maine, Josh Hawley of Missouri, and Jerry Moran of Kansas, according to a detailed report from ZeroHedge.

The vote, held around 2:15 p.m. ET, was the first floor test of comprehensive crypto market-structure legislation in the Senate. It was not a vote on final passage but on whether debate could begin. The result freezes the bill with almost no calendar time remaining before the 2026 midterm elections.

Bitcoin fell roughly 4% in U.S. trading Tuesday, stabilizing near $75,900 early Wednesday. As of Wednesday morning, Bitcoin was trading at $75,876.52, down 1.72% on the day, with a market cap of $1.52 trillion, according to NDTV Profit. The broader market sold off sharply: XRP slipped 7.44%, Ethereum fell 3.39%, Solana declined 3.7%, and Dogecoin dropped 3.06%, NDTV Profit reported.

Crypto-related equities also took a hit. Coinbase and Circle Internet Group each fell about 9%, Reuters reported via The Star. BitMine (BMNR) stock dropped 4% alongside Bitcoin, Benzinga reported. More than $540 million in bullish crypto bets were unwound in the last 24 hours, according to Coinglass data cited by the Straits Times. U.S.-listed spot Bitcoin ETFs saw over $450 million in net outflows on Sept. 15, the largest single-day withdrawals since June.

**How the deal collapsed**

The Clarity Act, which passed the House 294-134 in July 2025, would have drawn a jurisdictional line between digital assets regulated as commodities under the Commodity Futures Trading Commission and those regulated as securities under the Securities and Exchange Commission. It also would have placed spot trading platforms under federal registration and set statutory terms for self-custody and noncustodial software, ZeroHedge reported.

The Senate Banking Committee had reported a version 15-9 in May 2026, with Democrats Ruben Gallego of Arizona and Angela Alsobrooks of Maryland joining Republicans. On Tuesday, both Gallego and Alsobrooks voted no on cloture, ZeroHedge reported.

Senate Republicans released what they called their “last, best and final” text on Sunday night, incorporating 126 substantive changes requested by Democrats, according to Sen. Cynthia Lummis, Banking Chair Tim Scott, and Agriculture Chair John Boozman. The revisions included new ethics language, edits to the Blockchain Regulatory Certainty Act for noncustodial developers, Agriculture Committee guardrails, and a Treasury “circuit breaker” aimed at addressing bank concerns about stablecoin yield draining community-bank deposits.

Democrats sent a counteroffer late Monday. According to people familiar with it cited by ZeroHedge, they demanded further ethics restrictions on large holdings, dependent children, and paid crypto promotions; a narrower BRCA that explicitly does not modify criminal law; and tighter rules on exchanges and conflicts. Republicans rejected the counteroffer Tuesday morning.

“In response to a significant step in their direction, Democrats have chosen to move the goalposts again,” Senate Banking Committee spokesman Jeff Naft said, per ZeroHedge. “The final text is public.”

**Three unresolved fights**

Ethics provisions were the political core of the deadlock. Democrats wanted restrictions on large crypto holdings by the president, vice president, members of Congress, judges, and their families, plus limits on paid promotions. Republicans added language they said tracked a Tillis-Gallego framework. Critics argued the provisions left gaps around existing Trump family ventures and gave too much enforcement discretion to the Justice Department, ZeroHedge reported.

TechSpot noted that President Donald Trump reported more than $1.4 billion in income from family crypto ventures in 2025. 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 cited by TechSpot.

Developer protections also proved contentious. The BRCA language was meant to shield noncustodial software developers from money-transmitter registration. Sen. Catherine Cortez Masto of Nevada led the Democratic push to narrow that provision, and Republicans had already removed explicit criminal safe harbors to satisfy her, but her camp still wanted a sentence stating nothing in the language changes criminal law, ZeroHedge reported.

A third fight involved banks and stablecoin yield. Eight trade groups, including the American Bankers Association and the Independent Community Bankers of America, attacked the new circuit breaker as “not a safeguard at all,” arguing it would fire only after deposits had already left, according to ZeroHedge.

**Market reaction and Fed headwinds**

The legislative failure compounds selling pressure ahead of the Federal Reserve’s expected rate hike on Wednesday. Fed Chairman Kevin Warsh is widely expected to raise rates amid inflation fears and soaring bond yields, the Straits Times reported. Markets price a better than 90% chance of a 25-basis-point hike, according to swaps data.

“Until investors gain more certainty on the path of rates globally, risk assets would remain under pressure,” Pratik Kala, a portfolio manager at digital-asset hedge fund Apollo Crypto, told Bloomberg via the Straits Times.

In posts on social media platform X, Ripple CEO Brad Garlinghouse called for a post-mortem examining why the bill failed, while Coinbase CEO Brian Armstrong said the industry could no longer wait on Congress and pointed to the SEC and CFTC as able to offer a clear regulatory framework, the Straits Times reported.

Veteran investor Ross Gerber said Tuesday that the Senate’s failure means another setback for Bitcoin, Benzinga reported.

Analyst Ray Salmond called the result a setback but not a derailment, noting regulators may sustain adoption, according to a separate Benzinga report.

**Outlook for Bitcoin**

The $74,000–$76,000 range for Bitcoin will be important to watch in the near term, Avinash Shekhar, Co-Founder & CEO of Pi42, told NDTV Profit. “Holding this zone could allow the market to consolidate and attempt a recovery towards $78,000–$80,000, while a decisive break below it could invite further selling pressure.”

Despite the decline, options data showed resilience. Roughly $1.7 billion in call options were held at the $80,000 level across all maturities on Deribit, the Straits Times reported, and more bets on Bitcoin to rise than to fall remain outstanding.

Agency rulemaking by the SEC and CFTC under existing powers remains possible, but TechSpot noted such rules would be vulnerable to court challenges and changes in political leadership. “This points to the larger challenge ahead,” Samson Leo, chief legal officer at stablecoin issuer StraitsX, told Bloomberg.