CLARITY Act Fails in Senate, Sends Crypto Values ​​Down

This Tuesday, September 15, the Senate failed to advance the CLARITY Act, with 49 votes to 50, while 60 were necessary. After a year of negotiations, political disagreements, mainly around Donald Trump’s crypto interests, got the better of the bill. This news immediately shook crypto values ​​on Wall Street. Can the CLARITY Act still be saved? Has Washington just permanently postponed the adoption of a federal framework for cryptos?

Disagreements over ethics caused the compromise to fail in the Senate

For the past year, the CLARITY Act bill has faced numerous sticking points, including from rewards on stablecoins to the treatment of software developers and lawsuits. However, the conflict has crystallized around Donald Trump and his interests in the crypto universe.

In question, hundreds of millions of dollars relating to World Liberty Financialwhose management is ensured by his sons, as well as his memecoin. Negotiations failed again on ethical provisions, mainly on the possibility for states to prosecute public officials and their possible application to their family members.

Many Democrats immediately linked their vote to these disagreements. Ruben Gallego said:

This bill failed quite simply because the Republicans refuse to stand up to the president.

Angela Alsobrooks emphasizes that elected officials were ready to find common ground before, according to her and other Democratic elected officials, the Republican leadership put an end to discussions. Cynthia Lummis, one of the Republican architects of the project, returned the accusation, claiming to have negotiated in good faith while they engaged in maneuvers.

The Democrats, having justified their opposition, put forward various specific grievances:

• Ruben Gallego criticizes the Republicans for having favored the demands of Donald Trump rather than seeking the 60 votes necessary with the Democrats;
• Catherine Cortez Masto believes that the text would have weakened the ability of law enforcement to pursue bad actors, maintained predictive markets in their current situation and insufficiently addressed ethical concerns;
• Angela Alsobrooks, who supported the advancement of the CLARITY Act in the banking committee under the condition of ethical guarantees, says she remains determined to regulate cryptos and protect the millions of Americans who hold them.

Crypto stocks immediately suffered the shock of the vote

There stock market sanction was not long in coming. Coinbase lost nearly 9% to $174.42, Circle fell 9.4% to $88.26, Galaxy Digital dropped 8% and Gemini 7%. Robinhood lost 3%, Bullish 5% and eToro 4%.

Among mining companies, Riot Platforms lost 5%, while MARA Holdings, CleanSpark, IREN and Core Scientific fell around 3% to 4%. Bitcoin itself fell by around 3% over twenty-four hours and briefly approached $75,000.

Also, investors reduced their exposure to risk before the Federal Reserve’s decision expected on Wednesday, while the Nasdaq and the S&P 500 were moving in the red. On the legislative front, a door remains ajar.

After initially voting yes, Republican Thom Tillis changed his vote and then requested a motion to reconsider. “This is not the end of the CLARITY Act”he says. According to Ji Hun Kim, CEO of the Crypto Council for Innovation, this procedure allows a new closing vote within two days.

The failure of the CLARITY Act postpones the American regulatory battle

The setback now goes beyond the immediate fate of the project. Brad Garlinghouse, CEO of Ripple, summed it up by “this one hurts”before claiming a “post-crisis assessment” on the reasons for the failure. White House crypto advisor Patrick Witt speaks “a huge disappointment”. He warns that the standards followed tomorrow by global financial markets could be those of Brussels or Beijing rather than Washington and New York.

The schedule adds difficulty. Even adopted in the Senate, the text would still have to pass through the House, which would not be possible before the November elections. Regulation does not end with the CLARITY Act, however. Kristin Smith, president of the Solana Policy Institute, recalls that the SEC and CFTC continue to move forward on crypto policy.

Summer Mersinger, CEO of the Blockchain Association, also promises to continue discussions with both parties. Washington has therefore not closed the file: the vote has above all postponed, and politically hardened, the search for a federal framework for cryptos.