The Senate blocked a bill to regulate cryptocurrency. Bitcoin has suffered its worst crash since June.

On September 15, the U.S. Senate blocked further consideration of the Clarity Act, dealing a serious blow to the crypto industry’s efforts to secure comprehensive market regulations, according to CNBC. This led to a decline in the price of Bitcoin and other cryptocurrencies, as well as a drop in the stock prices of companies associated with the crypto industry.

The bill, which is considered crucial for the cryptocurrency industry, failed to secure the 60 votes needed for consideration in the U.S. Senate: only 49 senators supported it, while 50 voted against it. Moreover, Bloomberg notes that the bill was even rejected by some Democrats who were considered supporters of the industry.

As a result, Bitcoin lost 3.3%, falling to $75,800. At one point, it was down 5.3%, while Ethereum dropped more than 8.3%. For both of the largest cryptocurrencies, this marks the sharpest decline since June, according to the agency’s calculations.

Shares of the cryptocurrency exchange Coinbase plummeted by more than 10%, shares of the trading platform Robinhood Markets fell by nearly 4%, and shares of Circle, the issuer of the USDC stablecoin, dropped by 11.4%, and shares of Strategy, the largest public holder of Bitcoin, fell by 5.7%.

This came as an unexpected setback for the crypto industry, whose representatives were confident that the bill would garner enough votes to move forward, according to CNBC. The day before—on the eve of the vote—shares of companies in the sector were rising.

The Clarity Act was intended to establish a regulatory framework for the industry. It divided supervisory authority between the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), established registration requirements for market participants, and regulated anti-money laundering measures.

The failed vote likely means that clearer regulations will have to wait until at least next year. Wyoming Republican Senator Cynthia Lummis, one of the crypto market’s leading advocates in the Senate, told reporters even before the vote that if it failed, “it’s all over,” according to CNBC. It will be difficult to revisit the bill anytime soon, partly because of the U.S. midterm elections, which are just seven weeks away. Senators are set to leave Washington in early October, while the House of Representatives will recess even earlier—as early as the end of this week.

According to the Polymarket prediction market, the probability of the Clarity Act being passed this year has dropped to 19%, Barron’s notes. As recently as Monday, it stood at 31%. Perhaps fearing precisely this scenario, Cathie Wood’s ARK Invest funds sold shares in cryptocurrency-related companies on September 14, according to trade reports reviewed by Barron’s. The companies in question are Bullish, which owns CoinDesk; Bitmine Immersion Technologies, which holds Ethereum on its balance sheet; as well as Coinbase and Circle.

“Institutional investors are capable of operating under strict regulations; it is much more difficult to build a business in an environment of uncertainty,” Bloomberg quotes Ayesha Kiani, Chief Operating Officer of Monarq Asset Management, as saying. “The failure to pass the Clarity Act prolongs the regulatory vacuum, which has very real consequences for where companies do business, where capital flows, and how quickly institutional investors are adopting crypto assets in the U.S.”

According to Bloomberg, the main obstacle to the Clarity Act’s progress has been disagreement between Republicans and Democrats over staking and ethical restrictions for the president and other elected officials who hold crypto assets.

The issue of ethics has become particularly pressing given Donald Trump’s income from the cryptocurrency business, which the agency estimates at $1.4 billion. The updated version of the bill provided for additional controls over officials’ crypto assets and was close to the Democrats’ demands, but some party members considered them insufficient. “It [the Clarity Act] doesn’t go far enough on ethics,” said Democratic Senator Cory Booker of New Jersey.

Another point of contention has been payments to stablecoin holders—so-called “staking.” Banks fear that returns on cryptocurrency deposits will prove more attractive than traditional banking products, which could cause the banking system to collapse. A provision was added to the latest version of the bill that would allow the U.S. Treasury Department to prohibit crypto companies from paying users rewards, interest, or income on stablecoins. However, banking associations have stated that such a mechanism would kick in too late—only after a significant outflow of deposits has already occurred. Small banks have also warned that customer funds could flow from banks to crypto companies, according to Bloomberg.

This article was AI-translated and verified by a human editor