CLARITY Act Fails in Senate, Sending Bitcoin and Ether into Free Fall

The US Senate's failure to advance the CLARITY Act has sent shockwaves through the cryptocurrency market, causing Bitcoin (BTC) and Ether (ETH) to plummet. The bill's collapse leaves a regulatory vacuum that could affect corporate activity in the US, capital allocation, and institutional investment.

BTC fell more than 5% after the Senate vote, while ETH dropped over 8%, both posting their biggest intraday declines since June. Crypto-linked stocks such as Coinbase, Circle Internet Group, and Strategy also suffered significant losses.

Ayesha Kiani, chief operating officer at Monark Asset Management, warned that the bill's failure will prolong the regulatory uncertainty, which could impact corporate activity and institutional investment. Jasper De Maere, an OTC trader at Wintermute, stated that discussion of a market structure bill in 2026 is effectively over.

The collapse of the CLARITY Act has accelerated the price decline, with CoinGlass data showing around $300 million of bullish crypto bets being liquidated before the vote. This surge in leveraged position liquidations has contributed to the sharp selloff across the cryptocurrency market.