The crypto market was suddenly hit hard by policy! A key bill broke through the US Senate and Bitcoin once fell below 75,000 US dollars

The Zhitong Finance App learned that the US Senate failed to advance the landmark digital asset market structure bill in a key procedural vote on Tuesday. Lawmakers from both parties voted against it, causing the cryptocurrency industry to experience a major setback in its efforts to establish a long-term regulatory framework. After the news was announced, crypto assets and related stocks fell sharply. Coinbase (COIN.US) once fell 12%, Circle (CRCL.US) fell 13%, and Bitcoin once fell below 75,000 US dollars.

The Digital Asset Market Clarity Act (Clarity Act), which has been on hold for a long time and has been strongly promoted by the cryptocurrency industry, aims to give the US Commodity Futures Trading Commission (CFTC) major powers to oversee the digital asset industry and establish a more clear federal regulatory framework for cryptocurrency trading platforms and spot trading.

According to Senate rules, the bill needed 60 votes to move forward, but the procedural vote on Tuesday ended with 49 votes in favor and 50 against, falling short of the required threshold.

Lawmakers from both parties voted against the crypto regulation bill and prevented it from progressing

The results of this vote show that the political differences surrounding cryptocurrency regulation are still clear.

Democratic lawmakers continue to express concerns about the code of ethics provisions in the bill, particularly how to handle the interests between US President Trump and the cryptocurrency business. Meanwhile, a handful of Republican lawmakers have joined the opposition, including Maine Senator Susan Collins and Missouri Senator Josh Hawley.

Even some Democratic lawmakers who have long supported the cryptocurrency industry ultimately didn't support moving the bill forward, including New York State Senator Kirsten Gillibrand.

The Democratic Party believes that although the latest version of the bill includes some moral restrictions on the president and other elected officials holding crypto assets, the strength is still insufficient. The controversy stems in part from Trump receiving approximately $1.4 billion in revenue from crypto-related businesses.

“It's not doing enough on ethics,” New Jersey Democratic Senator Cory Booker told reporters on Tuesday.

This loss is significant for the cryptocurrency industry. Over the past few years, industry participants have invested hundreds of millions of dollars and significant lobbying resources to push the US Congress to establish a more clear and long-term stable digital asset regulation system. However, it is less than two months until the November US midterm elections. As congressmen gradually turn their attention to elections, the difficulty of continuing to advance the bill in the short term is likely to increase further.

Coinbase once plummeted 12%, Circle fell 13%, and Bitcoin fell to 75,000 US dollars

The cryptocurrency market declined rapidly after the bill failed to get enough votes.

Coinbase (COIN.US), one of the largest cryptocurrency trading platforms in the US, once extended to 12%, while stablecoin issuer Circle (CRCL.US) once fell 13%.

Meanwhile, Bitcoin fell 5.3% at one point, falling below $75,000. Market reaction shows that investors have previously viewed further clarification of the US digital asset regulatory framework as an important potential catalyst for the crypto industry, and the blocking of the bill's progress has once again exacerbated policy uncertainty.

The Republican leadership in the Senate was still trying to get enough support until now. On Sunday evening, Republican lawmakers unveiled the text of the latest Clarity Act, which added a number of changes, including expanding the powers of US state attorneys general to enforce relevant code of ethics provisions while further restricting cryptocurrency companies from providing rewards or interest to stablecoin users.

However, these two issues are also the most difficult issues in the process of advancing the bill.

Stablecoins “pay interest” become the focus of competition between banks and the crypto industry

In addition to Trump-related conflict of interest issues, whether stablecoins can provide users with rewards, interest, or benefits has become another major dispute between traditional banking and digital asset industries. The latest version of the bill adds a “fusing mechanism” that allows the US Treasury to prohibit cryptocurrency companies from providing rewards, interest, or revenue to stablecoin users under certain circumstances.

The traditional banking industry has always worried that if stablecoins can provide users with benefits like bank deposits, large amounts of capital may flow from traditional banking systems to cryptocurrency platforms, thereby weakening the bank deposit base.

The US banking industry organization said in a joint letter to Senate leaders on Monday that if a “fusing mechanism” is only activated after a large amount of deposits have been lost, then it actually cannot actually play a protective role. Community banks have also warned that the relevant regulations may cause large deposits to flow from local banks to cryptocurrency companies.

The issue of stablecoin earnings is no longer just a technical provision in digital asset regulation, but has gradually evolved into an interest dispute between the traditional banking industry and the cryptocurrency industry over funds and deposits.

Proponents: The bill will establish a consumer protection mechanism for the digital asset market

The Trump administration and Republican senators who support the bill believe that the Clarity Act can establish new consumer protection measures for the digital asset market while ending the long-standing lack of regulatory authority and responsibility in the US cryptocurrency industry.

One of the core elements is clearly empowering the CFTC to directly regulate digital asset trading platforms and cryptocurrency spot trading.

If the relevant regulations are finally implemented, cryptocurrency trading platforms will face more clear registration requirements and other regulations, thus further integrating the digital asset industry into the federal regulatory system.

For large financial institutions, the regulatory rules themselves are not necessarily the biggest obstacle to entering the digital asset market; the real problem may be that the rules have been uncertain for a long time.

Ayesha Kiani, chief operating officer of Monarq Asset Management, said that institutions can operate under strict rules, but it is more difficult to establish long-term business around “uncertainty.” Failure to advance the Clarity Act will extend the current regulatory gap in the US digital asset market, and actually affect where companies do business, where capital flows, and how quickly US institutional investors adopt digital assets.

Congressional legislation blocked, CFTC may still push forward regulatory rules on its own

However, even if the Clarity Act ultimately fails to be passed by Congress, the US digital asset regulation process will not necessarily come to a standstill.

Regulators who are relatively friendly to the cryptocurrency industry have previously said that if Congress fails to complete legislation, regulators are prepared to act on their own. CFTC Chairman Michael Selig stated last month that the agency is considering a number of potential cryptocurrency regulations, but is still waiting to see the final progress of the Clarity Act in Congress.

This means that US digital asset regulation may face two different paths in the future. On the one hand, Congress may continue to try to pass legislation to establish a more complete and lasting market structure; on the other hand, if political differences continue to block legislation, regulators such as the CFTC may instead pass administrative supervision measures to fill some gaps in the system.