Bitcoin Falls Nearly 4% as US Senate Rejects Landmark Crypto Bill

Bitcoin extended losses on Tuesday, falling nearly 4% after a significant bill aimed at establishing a regulatory framework for digital assets failed to pass a crucial U.S. Senate vote. The decline was compounded by broader market pressure from surging Treasury yields and oil prices ahead of a widely expected Federal Reserve interest rate decision.

By late Tuesday trading, the world's largest cryptocurrency had dropped 3.8% to $75,748.2, according to Investing.com data.

Senate Rejects Clarity Act in Narrow Vote

The Clarity Act, a landmark bill designed to create a comprehensive regulatory structure for cryptocurrencies, was defeated in a 49-50 vote, falling short of the 60 votes required for passage. The legislation had previously cleared the Senate Banking Committee but stalled amid disagreements over its provisions.

Key points of contention included the treatment of yield payments on stablecoins and the proposed division of regulatory authority between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Senator Cynthia Lummis (R-Wyo.), a key proponent of the bill, expressed frustration after the vote, stating on social media that Senate Democrats were "never truly serious about protecting consumers."

Industry Response and Market Impact

While the legislative setback weighed on prices, some in the crypto industry offered a more measured response. Blockchain infrastructure provider tZERO stated the vote does not change the long-term "trajectory" toward regulated digital asset markets, noting that "other paths remain open." Similarly, a prominent corporate holder of Bitcoin posted on social media that the cryptocurrency's legal status in the U.S. does not depend on the bill's passage.

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The negative sentiment spread across the digital asset market, with major altcoins also posting significant losses:

• Ether (ETH) fell 5.7% to $2,401.82.
• XRP declined by 10.9%.
• Solana (SOL) and Cardano (ADA) dropped 6.1% and 7.2%, respectively.

Broader Market Pressures Weigh on Crypto

The crypto market's downturn also reflects wider anxiety in financial markets. The U.S. 10-year Treasury yield climbed to 5.006%, its highest level since 2007, making speculative, non-yielding assets like Bitcoin less attractive to investors.

This move in the bond market comes as traders anticipate a hawkish stance from the Federal Reserve. The CME FedWatch tool indicates a 94% probability of a 25-basis-point interest rate hike at the conclusion of the central bank's meeting on Wednesday. Rising oil prices, with Brent crude settling at $108.51 a barrel, have further fueled inflationary concerns and expectations of tighter monetary policy.