Senate Rejects Clarity Act, Delays Federal Crypto Regulation Until 2027
The Senate's Clarity Act, also known as the Digital Asset Market Structure bill, was voted down in a 50-49 vote on Tuesday. This means that federal crypto regulatory frameworks will not be possible until at least 2027.
The legislation required a supermajority of 60 votes to invoke cloture and proceed to a final vote. Despite the efforts of Republican backers who made over 120 desired revisions during lengthy deliberations, the bill still failed due to two primary obstacles.
One obstacle was the 'Trump Crypto Profit' issue. Democrats, led by Senator Elizabeth Warren (D-MA), panned the freshly crafted ethics measures as a facade that would let Trump and his family continue to make money from their cryptocurrency businesses even while he was in office.
The second obstacle was resistance from the financial industry, which was concerned that the bill's provisions would cause customers to stop putting their money in traditional bank accounts and start putting it in digital ones. This concern led lawmakers in rural and banking-centric areas to worry about a possible systemic loss of deposits in community banks.
The market reacted quickly to the news, with Bitcoin (BTC) dropping below $76,000, a decrease of around 4% in the hour after the vote. Crypto stocks also took a hit, with Coinbase falling more than 10% and Circle Internet falling almost 11.5%. The failure of the Clarity Act has left a vacuum that pro-crypto Super PACs and agencies are ready to fill.