Crypto Slides to Near Four-Week Lows After Senate Kills CLARITY Act, Fed Rate Call Looms

The Digital Asset Market CLARITY Act needed 60 votes to clear a Senate procedural hurdle Tuesday. It got 49. Now crypto is paying for it.

Bitcoin opened Wednesday at $75,586.51, down 3.3% from Tuesday's open, according to Yahoo Finance. It touched as low as $75,026 Tuesday, near a four-week low, according to Dow Jones Newswires reporting carried by Morningstar. Ethereum opened at $2,397.64, down 4.6%. XRP took the worst beating, sinking almost 10% to around $1.29-$1.30 during Asian trading, according to Altcoin Buzz. Solana and Dogecoin each fell roughly 5%.

Bitcoin rallied about 25% between Aug. 19 and Aug. 25 and briefly topped $82,000 in early September before rolling over, according to Morningstar. It's still nowhere near its all-time high of $126,198.07, hit Oct. 6, 2025.

Why the bill died

The CLARITY Act, which would set up a comprehensive federal framework for regulating digital assets, cleared the Senate Banking Committee back in May. It spent months stuck on the floor while leaders hunted for seven Democratic votes to break a filibuster.

They came up short. Sen. Thom Tillis (R-N.C.) reportedly switched his vote from yes to no at the last moment, according to Epoch Times, contributing to the 49-50 defeat.

Sen. Cynthia Lummis (R-Wyo.), one of the bill's chief champions, argued Democrats had already secured more than 100 concessions and wrote roughly half of the bill's 630 pages. "It's a vote against the consumer protections American families are counting on," Lummis said on the Senate floor, adding that failure to pass it hands "the future of financial innovation to a foreign competitor." She said the final text included a provision letting state attorneys general enforce ethics requirements on federal officials, which she said President Trump endorsed.

That wasn't enough for Senate Democrats. Sen. Elizabeth Warren (D-Mass.) said on the floor Sept. 14 that the bill would "turbocharge President Donald Trump's ability to rake in billions and billions of dollars from crypto" while Americans face an affordability crisis. Sen. Elissa Slotkin (D-Mich.) said she opposed the bill specifically because of insufficient ethics language covering Trump, his children and Cabinet members with crypto holdings, and she also flagged concerns about whether the Commodity Futures Trading Commission has the staffing to actually implement the framework, according to Altcoin Buzz.

Lummis's case, that a decade of legislative work collapsed at the finish line and leaves American crypto firms without clear rules while competitors overseas move ahead, is a real cost to industry certainty. Warren and Slotkin's concern, that a sitting president with active crypto investments could personally benefit from the very framework Congress is writing, is also a legitimate conflict-of-interest question that neither side fully resolved in the bill's ethics language. The Senate record shows negotiators got close on nearly everything else. Ethics provisions covering presidential conflicts were the one item both parties refused to move further on.

Galaxy Digital CEO Mike Novogratz, who Forbes estimates is worth $5.8 billion, called the outcome a symptom of broken government. "18 months of work between our industry, Democrats, and Republicans, and Clarity falls apart on the 5-yard line," Novogratz wrote on X, according to Yahoo Finance. He argued Republicans "were afraid of putting real limits on a President's ability to profit from digital assets" while Democrats "decided that this one industry is where they would fight a corruption battle."

The Fed is next, at 2 p.m. ET today

The Federal Reserve's rate decision is scheduled for 2 p.m. ET Wednesday, Sept. 16. As of Wednesday morning, the CME FedWatch tool put the odds of a 25 basis point hike at 92%, according to 24/7 Wall St., which would move the target range from 3.50%-3.75% to 3.75%-4.00%. If it happens, it would be the first Fed rate increase in three years.

Analysts are split on what that means for crypto. Yusuf Fakhro of ARP Digital told Dow Jones Newswires that "one hike and a pause should let prices steady," but warned a sustained tightening cycle would be a harder setup for Bitcoin and Ethereum, and worse for smaller tokens. Naeem Aslam of Zaye Capital Markets said Bitcoin holding the $75,000-$76,000 range despite roughly 5% Treasury yields and the legislative setback signals underlying demand still exists, but said a real recovery needs clearer regulation, looser financial conditions, or both. Javier Molina of eToro said a break below $75,000 could send Bitcoin toward $69,000-$70,000.

The CLARITY Act's defeat was a procedural vote, not a final kill shot on the bill's substance, so it could theoretically resurface. But Morningstar's reporting notes the loss effectively ends its chances of passing before November's midterm elections. Whether Senate leadership brings back a revised version and whether ethics language on presidential conflicts gets any tougher remains unresolved.