WASHINGTON — Fingers were pointing Tuesday in Washington after the Senate failed to advance the CLARITY Act, with many saying dispute over President Donald Trump’s cryptocurrency interests was one of the key obstacles to an agreement.
As the CU Daily reported here, the procedural vote fell short of the 60 votes needed to move the legislation forward after months of negotiations over the measure, which would more closely integrate digital assets into the traditional U.S. financial system and establish clearer federal rules for the industry.
The cryptocurrency industry has spent hundreds of millions of dollars on lobbying and political activity as it has sought legislation clarifying how digital assets are regulated, while the banking industry lined up on the other side in opposition to numerous provisions.
As the CU Daily has also reported, the credit union trade groups have been lobbying to ensure CUs receive authority equal any that is granted to banks, but as of the Senate vote credit unions were not specifically mentioned in the bill.
Trump, who embraced cryptocurrency during his 2024 presidential campaign after previously criticizing it, has supported legislation establishing a federal regulatory structure for the industry.
But CNN reported that Trump’s own financial interests in cryptocurrency became a major point of contention in the final negotiations.
Democrats Seek Stronger Ethics Restrictions
Trump has earned more than $1 billion from cryptocurrency businesses launched by him and his sons before he returned to the White House.
Democrats, including Sen. Elizabeth Warren of Massachusetts, argued that the CLARITY Act did not contain sufficient restrictions on cryptocurrency transactions by presidents and other public officials involved in setting digital-asset policy.
“This crypto bill says, ‘Have at it, Mr. President.’ … That’s just fundamentally wrong,” Warren told CNN.
Warren said she supports cryptocurrency regulation but believes it should include restrictions preventing officials involved in setting crypto policy from buying, selling or trading digital assets.
Republicans and some Democrats who supported the legislation argued that opponents continued to demand additional changes despite lengthy negotiations.
Thune Blames Democrats
Senate Majority Leader John Thune of South Dakota said after the vote that Republicans had been unable to satisfy Democratic demands.
“I don’t think you ever go far enough for the Democrats,” Thune said, according to CNN.
Republicans released revised legislative language Sunday that included changes to ethics provisions intended to address Democratic concerns. Reuters reported the revisions included numerous changes sought by Democrats, but they did not generate enough support to advance the measure.
Gallego Blames Breakdown in Negotiations
Sen. Ruben Gallego (D-AZ), who had been a key Democratic negotiator on the legislation, blamed Republicans for ending negotiations and moving ahead with the procedural vote.
Gallego said Republicans should have continued working with Democrats to develop stronger ethics provisions capable of attracting the 60 votes needed to advance the bill.
“They were never serious about bipartisan negotiations,” Gallego said, according to CNN.
The disagreement over ethics provisions was not the only issue surrounding the legislation. Banks and other financial institutions had also raised concerns about provisions involving stablecoins and their potential effect on deposits and lending.
The banking and cryptocurrency industries had stepped up lobbying ahead of the vote, with Reuters reporting that more than $190 million had been spent on crypto-related political efforts.
Crypto Markets Fall Following Vote
Cryptocurrency prices and crypto-related stocks fell following the Senate vote.
CNN reported bitcoin declined about 4% Tuesday to roughly $75,700. Coinbase shares fell about 10%, while Circle, the stablecoin issuer, dropped about 11%.
Reuters similarly reported bitcoin was down approximately 4% at about $75,900, while Coinbase and Circle shares each fell roughly 9%.
The declines occurred as part of a broader market selloff, meaning the legislative setback was not necessarily the only factor affecting cryptocurrency prices.
Industry Says Push for Regulation Will Continue
Despite the defeat, some cryptocurrency executives said the vote would not halt the industry’s development or its efforts to secure federal legislation.
David Mercer, CEO of trading platform LMAX Group, said major banks and asset managers have already invested heavily in digital-asset infrastructure and are unlikely to reverse those investments because of one congressional vote.
“Despite this setback, we’ll continue to invest, build and engage constructively with US policymakers because we believe regulatory clarity is a question of when, not if,” Mercer said in a statement provided to CNN.
The failed vote leaves the future of the CLARITY Act uncertain. Reuters reported that Sen. Thom Tillis (R-NC) changed his vote for procedural reasons, preserving the possibility that the Senate could reconsider the measure.
