Senate Deals Major Setback to Crypto Industry

Crypto's big bid for clearer rules just ran into a wall in the Senate. Lawmakers on Tuesday blocked the Clarity Act from reaching the floor, halting a long-argued effort to build a comprehensive regulatory framework for digital assets and rattling cryptocurrency markets in the process, CNBC reports. The motion to proceed pulled in 50 votes in favor and 49 against, well short of the 60 needed to advance. Four Republicans—Sens. Susan Collins, Josh Hawley, Jerry Moran, and Thom Tillis—broke with their party to vote against advancing the bill, reports the Hill. Bitcoin fell about 3% after the vote and shares of Coinbase dropped 10%.

Last-minute rewrites failed to satisfy Democrats' demands for tighter limits on public officials' crypto profits, including those tied to President Trump and his family. Democrats said the changes left too many loopholes. "The compromise we had was a good ethics compromise that would have bought a lot of Dem votes," said Democratic Sen. Ruben Gallego. "All President Trump wants is for the Senate to give him time to crime, and I won't support any piece of legislation that enables him," Gallego said, per the New York Times. "This legislation failed squarely because Republicans refuse to say no to the president."

• Democratic Sen. Mark Warner said he still wants a comprehensive regulatory framework for the industry, but "we cannot pass landmark legislation governing this industry while allowing the president of the United States to personally profit from it," the AP reports.
• Patrick Witt, the White House's crypto adviser, warned that the result raises the risk that "the standards that global financial markets adhere to in the future will be those of Brussels or Beijing, rather than Washington and New York."

With the midterms weeks away and Congress about to leave town, supporters now say the bill is effectively dead for the year—clearing the way for regulators like the SEC and CFTC to keep shaping the rules on their own, and for deep-pocketed crypto PAC Fairshake to potentially target senators who voted no. Crypto companies, which expressed strong disappointment after the vote, have already racked up more than $100 million in political spending ahead of the midterms, the Times reports.