Bitcoin gives back Monday's gain as Clarity Act odds fade on Polymarket
Bitcoin and broader crypto markets experienced a selloff on Tuesday as investor optimism regarding the U.S. Clarity Act faded following a breakdown in bipartisan negotiations. The decline was driven by news that Democrats issued a counterproposal, casting doubt on whether the landmark crypto regulation bill will pass before the November midterm elections.
Why it matters
The potential failure of the Clarity Act represents a significant setback for the U.S. crypto industry, as it delays the establishment of a clear regulatory framework for market structure and digital asset oversight.
Polymarket odds on the U.S. Clarity Act being signed into law this year followed a similar trajectory, reaching 34% on Monday before sliding back to 17%. The drop was caused by news that Democrats had crafted a counterproposal after rejecting a revised draft Republican negotiators circulated on Sunday. The sticking point is the ethics language governing officials' crypto holdings rather than the market structure provisions themselves.
The Senate votes at 2:15 p.m. ET on whether to invoke cloture, or force a vote, on the bill. If the bill passes, that would move the industry closer to its first clear set of U.S. rules on who regulates what. A failure would likely shelve market structure legislation until after the midterm elections in November.
Selling pressure was near universal on Tuesday, with 92 of the CoinDesk 100 constituents lower on the day and the index itself down 1.6%.
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