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Bitcoin illustration. / Reuters, Yonhap

The Donald Trump administration's Clarity Act, which sought an overhaul of the U.S. cryptocurrency regulatory framework, has failed to clear the Senate. With both parties unable to reach consensus over conflict-of-interest provisions concerning crypto ventures tied to President Trump and his family, disruptions to U.S. efforts to formalize digital asset regulations appear unavoidable.

Reuters reported on the 15th (local time) that the U.S. Senate failed to secure the necessary votes in a procedural vote to advance the Clarity Act, a comprehensive cryptocurrency regulatory bill backed by President Trump.

In the procedural vote, the measure received 49 votes in favor and 50 against, falling well short of the 60-vote threshold required to proceed with floor consideration. From the Republican side, Senators Jerry Moran, Susan Collins, Josh Hawley, and Thom Tillis joined Democrats in voting against the bill.

With Congress preparing to enter recess ahead of the November midterm elections, the failed vote effectively leaves the legislation shelved.

The Clarity Act aims to strengthen the legal foundation by establishing a regulatory blueprint delineating oversight authority over cryptocurrencies and digital assets. Viewing the legislation as a means to solidify legal ground, the virtual asset industry spent hundreds of millions of dollars lobbying for its passage, but ultimately failed to sway Democratic lawmakers.

Coinbase Chief Executive Officer Brian Armstrong stated, "I am disappointed that the bill failed to advance in the Senate."

He also expressed optimism that regulatory clarity could still be achieved despite the legislative roadblock, adding, "The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) can use their existing authorities to establish clear rules."

Consequently, regulatory bodies under the Trump administration, including the SEC and CFTC, are expected to lead the direction of virtual asset policy. Reuters noted, however, that establishing industry-friendly regulations will likely face tough headwinds.

Meanwhile, Bitcoin tumbled more than 5% on the day, marking its steepest one-day drop since June. Shares of Coinbase and stablecoin issuer Circle also sank by as much as 10%.

                                                                                                            Park Jin-sook