XRP dropped nearly 10% to touch $1.30 during Asian trading hours on Wednesday morning. Data from CoinDesk placed XRP at the bottom as the worst-performing large-cap token, following the US Senate’s decision to block the CLARITY Act.
The bill’s legislative path was officially halted during a cloture vote that ended 49-50, falling 11 votes short of the required 60-vote threshold. Several Republican senators broke ranks to vote against the compromise draft spanning over 600 pages, which negotiators had spent extensive time putting together.
Ethics Provision Triggers Deal Breakdown
The compromise draft reached an impasse over an ethics provision, which included strict prohibitions on senior officials holding financial interests in the crypto sector. Senator Elissa Slotkin, a Michigan Democrat, was among those detailing their reasons for voting “no,” arguing that the bill’s ethics standards were far too weak to implement effectively.
Her objection cited the financial activities of Donald Trump, his children, and Cabinet members who directly generated revenue from crypto. In addition to ethics concerns, Slotkin pointed out that the Commodity Futures Trading Commission (CFTC) lacks adequate staffing for regulatory enforcement, while critical loopholes remain open regarding money laundering and terrorist financing.
Crypto Equities Suffer Steeper Declines
Market reaction to the failed legislation hit crypto-related equities harder than token prices. On Wall Street, Coinbase shares dropped nearly 9% to close at $174.42, while Circle stock tumbled over 9% to $88.26. The downward momentum spread across other major players, with Galaxy Digital losing 8% and Gemini shedding 7%.
Mining companies and corporate treasury holders also felt the pressure from the regulatory setback. Shares of Bullish and Riot Platforms both fell 5%, followed by a 4% decline in eToro. Meanwhile, Robinhood, MARA, CleanSpark, IREN, and Core Scientific all closed in negative territory, posting losses between 3% and 4%.
Focus Shifts to Financial Regulators
With Senate approval off the table, the crypto sector has turned its full attention to financial regulators. The Securities and Exchange Commission (SEC) is reportedly developing a draft Reg Crypto framework alongside specific rules for tokenized securities. SEC rulemaking currently stands as the primary remaining path for the industry to achieve regulatory certainty.
For crypto political action committees (PACs), including Fairshake, the gridlock has prompted immediate campaign mobilization. These groups are now adjusting their strategies to respond to senators who voted against the CLARITY Act ahead of the upcoming US general election in November.
Source: CoinDesk.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
