The U.S. Senate failed to advance a procedural cloture vote on the Digital Asset Market Clarity Act (H.R. 3633), receiving only 50 votes in favor and 50 against, falling short of the required 60-vote threshold. Not a single Senate Democrat voted in favor. The outcome has virtually eliminated the bill’s chances of consideration in 2026, with Congress having fewer than 36 legislative days remaining before lawmakers shift their focus to the November midterm elections.
Ethics disagreements and conflicts of interest
The CLARITY Act is not an unseasoned bill. Republicans spent more than a year negotiating, incorporating more than 126 Democratic changes into a revised draft spanning over 630 pages released just days before the vote. President Trump had also agreed to roughly 80% of the new proposals.
The bill stumbled over its ethics provisions, specifically conflicts of interest surrounding President Trump’s own crypto ventures. The legislation would require officials holding significant crypto investments to divest or place their assets into a blind trust. However, Democrats argued these measures did not go far enough. Just ahead of the vote, Senate Democrats pressed to expand the ethics rules to cover the president’s children and mandate that officials with substantial financial stakes in crypto firms sell their holdings rather than merely transferring them into a blind trust.
Senator Mark Warner stated that both parties had actually come quite close to an agreement on law enforcement and national security provisions. However, he could not support the bill while the president stood to profit from the crypto sector through World Liberty Financial and the TRUMP memecoin.
18 state attorneys general also sent a letter urging the Senate to reject the bill, expressing concern that it could curb state authority to prosecute crypto-related fraud. New York Attorney General Letitia James remarked that the legislation would “embolden fraudsters.”
Crypto market reaction
Bitcoin climbed to nearly $77,200 ahead of the vote, but as the tally of opposing votes mounted, the price plunged to $75,000 before staging a tentative rebound around $75,600. The market avoided an aggressive sell-off, partly because investors had already braced for a downside scenario. On Polymarket, the odds of the bill being signed into law in 2026 plummeted from around 34% to just 5% following the vote.
At the same time, the market faced broader macroeconomic pressure: the Federal Reserve kicked off its two-day meeting with the probability of a 0.25% interest rate hike rising to 86.5% according to Polymarket, the 10-year Treasury yield touched 5.00% (its highest level since 2007), and Brent crude prices remained anchored above $103 per barrel.
Not the end of the road?
Several senators argued that this is not the final blow. Democratic Senator Angela Alsobrooks asserted that the bill “will not die” because more than 70 million Americans participate in the crypto market without a clear regulatory framework. However, she also criticized Republican leadership for rushing the vote before resolving ethics and conflicts of interest.
Conversely, Senator Cynthia Lummis, the bill’s primary architect, argued that Democrats “were never truly serious” about passing it. According to her, over more than a year of talks, every time a consensus was reached, Democrats introduced new conditions.
SEC Chairman Paul Atkins stated that the SEC and CFTC stand ready to draft their own crypto rules should Congress fail to act. This is a significant signal: even if the CLARITY Act falls by the wayside, the development of a comprehensive regulatory framework for U.S. crypto could proceed through regulatory channels rather than legislative ones.
The key question now is whether both sides will return to the negotiating table after the midterm elections. If not, the U.S. crypto industry will continue operating in a legal vacuum, with the SEC and CFTC shaping policy on an ad-hoc, enforcement-by-enforcement basis rather than through a comprehensive framework.