Topline
Major cryptocurrency assets slid Tuesday as the Senate failed to pass the Digital Asset Market Clarity Act, which seeks to create a federal regulatory framework for digital assets and faces opposition from some Democrats who say the legislations provisions are too weak.
The CLARITY Act vote was held Tuesday afternoon.
Photo by Justin TALLIS / AFP via Getty Images
Key Facts
The CLARITY Act, which needed 60 votes to pass the Senate, failed after a 49-50 vote was held.
Bitcoin dropped 4.1% on Tuesday afternoon to around $75,000, falling to its lowest point in its last five days of trading.
Ethereum fell over 5% to $2,397, also recording its lowest point in the same period.
XRP tumbled 10.3% while meme coin DOGE dropped 5.6% and Solana fell over 4%.
Some digital assets were spared from significant losses Tuesday afternoon, with Tether, Binance Coin and USD coin falling just a fraction of a percent.
Big Number
7%. Those are the Polymarket odds the CLARITY Act will become a law before the end of the year, dropping from the 18% odds it held Monday.
What to watch for
The CLARITY Act will have to be reintroduced to Congress at a later date after failing Tuesday, meaning it is seriously unlikely it will be presented in front of lawmakers again before the end of the year as midterm elections approach.
What Is The Clarity Act？
The CLARITY Act categorizes and assigns digital assets to specific federal regulatory bodies. For example, digital commodities like bitcoin will be regulated by the Commodity Futures Trading Commission, while tokens issued by companies to raise capital will be overseen by the Securities and Exchange Commission. The legislation also establishes a structure for stablecoin issuers allowing traditional banks and crypto companies to issue stablecoins (such as tether) as long as they meet certain requirements. Under the bill, cryptocurrency exchanges will be required to keep customer funds separate from corporate funds and establish surveillance systems to prevent market manipulation and insider trading.
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Key Background
Though the CLARITY Act looks to increase government oversight of cryptocurrencies, many digital asset companies have supported it for the legitimacy and regulatory boundaries it would create for them. The companies also believe instituting the framework would encourage more institutional investment and lessen regulation by enforcement that has typically been conducted through sudden lawsuits from the SEC. Democrats including Sen. Elizabeth Warren, D-Mass., have criticized the CLARITY Act, claiming it is unenforceable against President Donald Trump and has loopholes that will allow him and other officials to benefit from crypto businesses. Trump and his family have partial ownership of World Liberty Financial, which sells digital assets and a U.S. dollar stablecoin called USD1. Trump and his family also have a majority of the supply of the $TRUMP meme coin.