US senators from both parties blocked a landmark digital asset market structure bill in a procedural vote on Tuesday. Democratic lawmakers expressed concerns about ethics provisions related to handling President Trump's cryptocurrency business interests. The legislation, which aimed to grant the Commodity Futures Trading Commission (CFTC) primary authority over the digital asset industry, required 60 votes in the procedural tally to advance to the next stage.

The failed vote deals a major setback to the cryptocurrency sector. The industry has invested hundreds of millions of dollars and spent years lobbying Congress to establish favorable and stable long-term regulatory rules. The midterm elections are now less than two months away.

Bitcoin extended its decline immediately following the news, falling as much as 5.3% to $74,910. Ether also dropped, declining over 8.3% at its worst, with some smaller tokens falling even further. Both Bitcoin and Ether hit their lowest prices since June.

The bill included ethics restrictions aimed at the president and other elected officials holding cryptocurrency assets. Trump's total gains of $1.4 billion from cryptocurrency-related transactions made this a key point of contention, with Democrats arguing the provisions did not go far enough. The latest version also added a "circuit breaker" mechanism involving the Treasury Department, which would allow it to prohibit crypto companies from offering rewards, interest, or yields to stablecoin users.

This issue has been a longstanding point of friction between the digital asset industry and the banking sector. In a joint letter to Senate leaders on Monday, banking organizations stated that "a circuit breaker that only kicks in after deposits have already significantly flowed out is hardly a safeguard." Community banks also warned that this measure could drive substantial deposits away from local banks and into cryptocurrency firms. Meanwhile, regulators supportive of the crypto industry indicated they are prepared to take action if the bill fails to pass Congress.