Washington (United States) (AFP) – A push for landmark US cryptocurrency legislation collapsed on Tuesday after Republicans and Democrats in Congress failed to bridge months-old differences over ethics, banking, and how the fast-growing industry should be regulated. The Digital Asset Market Clarity Act failed to secure the 60 votes needed to advance to a debate in the Senate, with safeguards governing President Donald Trump’s extensive crypto interests among the biggest obstacles to a deal.
Massachusetts Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, said the bill posed “massive risks to families, our national security, and our economy.” “And if that’s not bad enough, while Americans across the country suffer from an affordability crisis, this bill will turbocharge President Donald Trump’s ability to rake in billions and billions of dollars from crypto,” she said. The defeat dealt a major blow to efforts to establish the first comprehensive federal framework for digital-asset markets and offered another illustration of Congress’s struggle to keep pace with disruptive new technologies as lawmakers wrestle with a similarly fraught debate over artificial intelligence.
The more than 600-page legislation would have divided oversight largely between the Securities and Exchange Commission and the Commodity Futures Trading Commission, replacing a regulatory patchwork that has shifted between administrations. A version passed the House last year, and the Senate Banking Committee advanced the measure on a bipartisan vote in May. But months of negotiations failed to produce a compromise capable of surviving the Senate floor, despite heavy lobbying from the crypto industry and a frantic final effort by Republicans to rewrite the legislation. With the November 3 midterm elections approaching and little time remaining on the congressional calendar, Tuesday’s defeat could effectively shelve the effort until a new Congress convenes.
Trump and his family earned more than $1 billion from crypto ventures last year, according to financial disclosures, putting the president’s business interests at the center of Democratic objections. Republicans made late changes intended to strengthen ethics provisions, including restrictions on elected officials issuing cryptocurrencies, requirements covering some crypto holdings, and greater enforcement powers for state attorneys general. Wyoming Senator Cynthia Lummis, one of the legislation’s leading Republican architects, said the final text incorporated more than 120 changes sought by Democrats. “A no vote on Tuesday means opposing real ethics reforms on politicians’ personal investments, handing American leadership in digital assets to our foreign competitors, and leaving Americans with zero protections in the digital asset markets,” she said ahead of the vote.
Democrats countered that the provisions contained loopholes and left too much enforcement authority in the hands of officials appointed by Trump. The dispute was not purely partisan. Community banks fiercely opposed provisions allowing rewards on stablecoin holdings, arguing they could pull deposits out of traditional lenders and reduce funding available for farmers and small businesses. Several Republican senators also expressed concerns about those provisions, complicating party leaders’ efforts to muster support for the bill.
The crypto industry’s failure to secure legislation came despite years of negotiations, intense lobbying, and hundreds of millions of dollars in political spending. Supporters argued that permanent legislation was needed to give businesses and consumers clear rules rather than leaving regulation dependent largely on decisions by federal agencies. The White House strongly backed the bill, framing cryptocurrency as an international technology race in which the United States risks losing ground to competitors. But its collapse comes as Congress confronts an even more complex struggle over artificial intelligence. Leading AI executives and researchers have issued increasingly stark warnings about the potential dangers of powerful systems, prompting calls from lawmakers in both parties for new safeguards. Yet Washington remains deeply divided over whether regulation is urgently needed or could instead slow US innovation and hand an advantage to China.
Crypto has been under sustained congressional scrutiny for years and has a mature, well-funded industry pushing for agreed rules. The failure to get a landmark bill through the Senate highlights the challenge facing lawmakers as they turn to technologies evolving considerably faster. Bitcoin, the world’s biggest cryptocurrency by market value, dropped sharply, losing around five percent by 1850 GMT to $75,039.
© 2024 AFP
