Senate Democrats voted down legislation to regulate cryptocurrency on Tuesday, leaving it all but certain Congress will not regulate an increasingly significant industry that is primed to unleash a wave of spending in the midterm elections.
The 49-50 tally fell 11 votes short of breaking a filibuster. It followed months of negotiations over the CLARITY Act, which was backed by crypto interests and passed the House more than a year ago. It would have established a framework for regulating cryptocurrencies, making it easier for digital assets to integrate with the existing U.S. financial system.
Democrats tanked the bill primarily over what they saw as a lack of provisions to rein in President Donald Trump’s crypto interests. Republican Sens. Susan Collins of Maine, Josh Hawley of Missouri and Jerry Moran of Kansas voted with Democrats to defeat the measure. Thom Tillis of North Carolina voted against the bill for parliamentary reasons in order to bring it back up in the future.
A bipartisan working group negotiated for months with the White House over Trump’s stake in World Liberty Financial, a finance platform and stablecoin issuer that is expected to receive a federal banking charter soon.
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Democrats demanded strict rules that would prevent Trump and other high-ranking federal officials from profiting from their own personal cryptocurrency business ventures while holding office. Any covered federal official would have to divest from those holdings or place them into a blind trust.
“I’ve tried to work on crypto legislation for years, but not crypto legislation that puts our national security at risk, or that threatens blowing up our economy, and not crypto legislation that supercharges Donald Trump feeding at the trough to make himself and his family richer while he regulates the industry,” Sen. Elizabeth Warren of Massachusetts, the top Democrat on the Senate Banking, Housing and Urban Affairs Committee, told reporters ahead of the vote on Tuesday.
Sens. Angela Alsobrooks (D-Maryland) and Ruben Gallego (D-Arizona) voted against the bill after voting with Republicans to advance it out of committee in May. Both cited the lack of a sufficiently robust ethics provision as their largest remaining concern ahead of the vote.
“Literally I don’t know how I’m going to vote yet,” Alsobrooks told The Washington Sun shortly before the vote. “It’s divestment.”
Sen. Mark Warner (D-Virginia), who was also involved in the bipartisan negotiations, said Alsobrooks’ concern was shared by most Democrats.
“It’s still frustrating because we’ve had these same three issues outstanding for six, eight weeks,” Warner said. “Why this couldn’t have been dealt with earlier, I’m a little concerned.”
Sen. Raphael Warnock (D-Georgia), another committee member of the , said it became clear over the course of the talks that Republicans “don’t want to fix the ethical loopholes” in the bill.
“We’re trying to find a path to get something done for consumers in a vastly unregulated area of our economy, and they’re focused on protecting Donald Trump,” Warnock said.
Republican negotiators said Tuesday’s vote effectively kills any chance of Congress regulating the industry ahead of the 2028 election. While Trump remains in office, Democrats are likely to continue opposing the legislation without a divestment provision.
“It’s over. We’ve been working on this bill for over a year, and we’ve given them over 120 of their requests,” said Sen. Cynthia Lummis (R-Wyoming), a key negotiator on the bill who is retiring in January. She said she sees no path forward on CLARITY after the midterms or next year.
Sen. Bernie Moreno (R-Ohio), another negotiator, echoed Lummis’ concerns, especially with House members set to return to their districts at the end of the week.
“Eighteen months,” Moreno said. “We’ve had more negotiations than you can ever imagine. Thousands and thousands of conversations.”
The crypto industry pushed Senate leadership to hold a procedural vote on the measure ahead of November, in part to help direct some of its political spending before the elections. Fairshake, the leading crypto-aligned PAC, started the cycle with nearly $200 million cash on hand.
With Democrats blocking the legislation over those ethics provisions, it’s unclear how crypto-affiliated groups might redirect their political spending. The industry has historically supported some Democrats, including Gallego and Sen. Elissa Slotkin in Michigan.
An increasing number of Republicans have also voiced concern about the bill. Hawley and Moran for example, pointed to potential negative impacts on small banks in their states. And Sen. John Curtis of Utah voted to introduce the bill but said he would not back the bill itself.
Warren said her party isn’t concerned about the potential for an onslaught of election spending by the industry, arguing it has been pushing the CLARITY Act for years without success.
“It’s our job when we run for elected office to stand up and do what’s right,” Warren said. “I believe that we can still do that. I watched during the primaries, and candidates who had a lot of crypto money still didn’t make it. The American people like to hear from a candidate who says, ‘I can’t be bought.’”
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