US Senate Blocks CLARITY Act, Sending Crypto Stocks into Free Fall

Crypto-linked stocks took a hit on Tuesday after the US Senate failed to move forward with the CLARITY Act, which aimed to provide regulatory clarity for digital assets. The bill's procedural step was blocked, requiring it to have at least 60 votes to advance. However, it fell short of this threshold, leaving it uncertain whether it will be passed before the new Congress begins in November.

Coinbase and Circle were among the hardest-hit stocks, with both companies dropping around 10% each. Bitcoin treasury-focused firms, including American Bitcoin, Strategy, and Strive, also saw significant declines, ranging from 5-8%. Miners like Riot Platforms, CleanSpark, Hut 8, and IREN also experienced losses of 4-6%.

The Senate's failure to advance the CLARITY Act has left investors reassessing their expectations for regulatory clarity in the near term. Bitcoin itself briefly dipped below $75,000 after the vote but recovered to around $76,000 at the time of writing. Despite this recovery, the market remains sensitive to developments surrounding US regulation.

Coinbase CEO Brian Armstrong had been a prominent advocate for the CLARITY Act, emphasizing its bipartisan momentum and predicting that either it would pass or regulators would issue new rules by September 16. However, with the bill now facing limited remaining time in the current legislative calendar, investors are left wondering whether momentum will shift to the next Congress after the midterms.