The Senate on Tuesday blocked consideration of the Clarity Act, dashing – for now – the Republican-led effort to codify an outline for regulating digital assets such as cryptocurrency.

The measure failed, 50-49. No Democrats voted for the bill, and a handful of Republicans – including Sens. Josh Hawley of Missouri, Susan Collins of Maine, Jerry Moran of Kansas and Thom Tillis of North Carolina– voted against it, too.

Tillis filed a motion to recommit – meaning the bill can return to the Senate floor. That prospect is unlikely, however, as senators are scheduled to leave Washington in early October and not return until after November’s midterm election, which may rebalance power in both houses of Congress.

The bill would have needed 60 votes to pass. A version passed the House last year but faced months of fierce negotiations in the Senate.

As early as June, the debate centered on stablecoin yield, rewards that some opponents argued would siphon money out of the banking system. Language written by Tillis and Sen. Angela Alsobrooks, D-MD, barred crypto firms from issuing rewards for stablecoin balances that are “economically or functionally equivalent” to interest-bearing bank deposits.

Further refined text would have allowed the treasury secretary to restrict stablecoin rewards if community banks saw measurable deposit flight. That clause would have expired after 18 months. 

More recently, concerns shifted toward President Donald Trump, who reported $1.4 billion in income from his family’s crypto businesses last year. Democrats pushed for stronger language to prevent Trump and other government officials from profiting off crypto rules as written.

Republicans this week released updated ethics rules that would have allowed state attorneys general to ban public officials from issuing, sponsoring or keeping a significant financial interest in digital assets. The rules would have penalized crypto exchanges that listed a digital asset issued or sponsored with a forbidden connection to a public figure.

Under the language, covered officials would have been required to divest from their crypto holdings or place them in a qualified blind trust. But the restrictions wouldn’t have extended to Trump’s sons, who run the family crypto venture.

New York Attorney General Letitia James and more than a dozen other attorneys general wrote the Senate Banking Committee on Monday, arguing the bill would jeopardize their ability to protect investors from crypto fraud and scams.

Some Democratic lawmakers, such as Sen. Richard Blumenthal of Connecticut, labeled the bill a “charade” while speaking on the Senate floor Monday.

The advocacy group Democracy Defenders Action decried “wide loopholes” in the ethics portion of the bill, arguing the measure, if passed, would give Trump “time to restructure his crypto venture companies so that he can continue to draw down unprecedented profits.”

The Clarity Act’s failure to advance means regulators – particularly the Securities and Exchange Commission and Commodity Futures Trading Commission – will be left to forge the roadmap governing digital assets.

The SEC, for its part, proposed rules last month that would allow startups to raise money through tokens without triggering securities regulation. The CFTC’s chair, meanwhile, has said the agency will use its existing authority to propose and codify rules for digital assets.

“While [regulators] can make rules, those are less stable and permanent than legislation,” Austin Campbell, an adjunct professor at New York University, told Bloomberg.

That may also reopen old wounds, including the debate on what qualifies as a security – the subject of a handful of Biden-era enforcement actions against crypto firms.

Without legislation, crypto policy arguably can fall under the influence of court interpretation.  

Crypto advocates, such as Brian Dixon, chief executive of Off the Chain Capital, argued the main concern on digital assets is less whether than when.

“We are going to get regulatory clarity, it’s just the timeline,” Dixon told Bloomberg.

Still, the legislative stumble could translate to a delay in acquisitions of crypto business.

Patrick Witt, executive director of Trump’s council of advisers for digital assets, called the bill’s failure “a major disappointment – and, I believe, a failure of American leadership.”

“It increases the risk that the standards that global financial markets adhere to in the future will be those of Brussels or Beijing, rather than Washington and New York,” Witt posted on X.