Crypto markets dropped late on Tuesday and early Wednesday, as investors digested a defeat that few in the industry had expected.
The procedural motion on the CLARITY Act drew 49 votes in favour and 50 against, 11 short of the 60 required to advance, dealing a major setback to efforts to pass market structure legislation this year.
The CLARITY Act, formally the Digital Asset Market Clarity Act, was meant to divide supervision of digital assets between the US Commodity Futures Trading Commission and the Securities and Exchange Commission, replacing a fragmented system in which classification has largely been settled through enforcement actions and litigation.
Bitcoin fell almost 34 over the past 24 hours to below $76,000, while HYPE, the token behind the decentralised exchange Hyperliquid, which stood to benefit from the legislation, also dropped about 4% to below $78.
Most major tokens fell alongside them.
The bill’s defeat is striking because so much had been conceded.
US President Donald Trump agreed over the weekend to ethics restrictions he had long resisted, including a requirement that federal officials and their spouses divest significant financial interests in crypto issuers or place them in a blind trust, and a role for state attorneys general in enforcing those rules.
Republican negotiators said that over 120 Democratic requests were written into the final text of the more than 600-page bill, representing a major bipartisan effort.
Still, it was not enough.
Four Republicans, Jerry Moran, Susan Collins, Josh Hawley and Thom Tillis, joined the 45 Democrats who voted against it. The Democratic Senator Chris Coons did not vote.
Democratic Senator Elizabeth Warren, the bill’s most prominent opponent, said it “fails to adequately protect investors, our financial system and our national security,” and attacked Trump’s crypto ventures on the US Senate floor hours before the vote.
Republican Senator Thom Tillis’s vote was a procedural exception. After having publicly backing the ethics package that morning, Tillis voted no to preserve a motion to reconsider, leaving open the possibility of another cloture vote.
Senator Cynthia Lummis, the Wyoming Republican who has led crypto legislation in the US Senate since co-authoring the Responsible Financial Innovation Act in 2022, was blunt afterwards.
“I think we’re done. It’s over,” she told reporters before going considerably further online.
“The once-proud Democratic Party is anti-consumer and pro-illicit finance, anti-ethics, anti-free enterprise, anti-worker, anti-livable wage jobs and pro-socialism,” she wrote in a social media post.
The failed vote likely means the crypto industry will have to wait until next year for clearer rules to be discussed.
The US midterm elections are in just seven weeks which complicates bringing the bill back up for consideration in the short term.
Senators are scheduled to leave Washington in early October and not return until after the election and the House recesses even earlier, heading out of town already at the end of this week.
Members, especially those in tight races, are eager to return to their home states and hit the campaign trail.
The legislation’s failure does not mean nothing happens. It means the rules are more likely to be written by agencies instead.
The US Securities and Exchange Commission under Paul Atkins and the US Commodity Futures Trading Commission under Michael Selig have already been building a framework without Congress.
The two signed a cooperation agreement in March and issued a joint interpretation sorting tokens into five categories, with Atkins stating that most crypto assets are not, in themselves, securities.
The SEC’s own agenda includes registration exemptions for token launches, a safe harbour for projects decentralising away from central control, and rules on custody and trading venues.
Analysts expect that work to accelerate now.
However, the catch is durability, because agency rules can be rewritten by a future US administration, which is precisely the instability the CLARITY Act was meant to end.
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Bitcoin (BTC-USD) is starting to consolidate above the $75,000 level after briefly reclaiming $80,000 for the first time since mid-May, underscoring persistent two-way order flow between aggressive buyers and sellers.
The timing of this resilience coincides with a striking historical
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The world’s largest cryptocurrency touched an intraday high of $79,500 on Friday, its best level in months, before easing to around $77,700 at the time of writing, leaving it up more than 25% since Monday.
The rally caps one of Bitcoin’s most dramatic weeks in years, following a stretch in which the token had lagged well behind its 2025 highs for much of 2026.
For six straight weeks, Bitcoin had been stuck grinding between $62,000 and $66,000, having fallen over 50% from the all-time high of around $126,000 it reached last year in October, to the low of roughly $57,600 it hit early in July of this year.
That prolonged malaise had encouraged traders to build up bearish positions over the course of the year, betting the token’s underperformance would continue. When the price broke higher this week, those bets unwound violently leading to an episode of forced short covering.
Ether, the second-largest cryptocurrency, and other digital assets have also surged on the same wave of positioning and momentum was reinforced by signals of extra liquidity from Washington.
The US Treasury doubled the size of its bond buybacks earlier in the week to calm a jittery bond market, and when yields climbed back regardless, US Treasury Secretary Scott Bessent vowed on Thursday to increase the buybacks even further.
Easier financial conditions and a softer dollar tend to favour riskier assets such as Bitcoin.
Regulatory developments also added further fuel. On Tuesday, the US Securities and Exchange Commission filed a proposal called “Regulation Crypto Assets”, offering crypto issuers lighter registration requirements.
A day later, US President Donald Trump hosted Coinbase’s Brian Armstrong, Ripple’s Brad Garlinghouse, Gemini’s Winklevoss twins and other industry leaders at the White House, pushing Congress to pass the long-delayed Digital Asset Market CLARITY Act.
The bill, which would split oversight of digital assets between the SEC and the US Commodity Futures Trading Commission, cleared the House last year but remains stalled in the Senate, needing 60 votes to clear a procedural hurdle on 15 September that it is not yet assured of overcoming.
Among the most striking moments of Wednesday’s summit came when US President Donald Trump said the Commodity Futures Trading Commission was working to bring Hyperliquid, a decentralised derivatives exchange, onshore “in a fully compliant legal fashion”, though the regulator has yet to publish any timeline for doing so.
The comment sent HYPE, Hyperliquid’s native token, surging 25% within 24 hours.
As it stands, HYPE is trading at around $74, up more than 30% since Trump’s remarks.
The decentralized exchange, popular with perpetual futures traders, has become something of a proxy for how far Washington’s warmer stance on crypto could extend.