The U.S. Senate voted down a procedural vote to begin floor consideration of the Clarity Act, which would regulate the market structure for digital assets.

According to blockchain outlet U.Today on Sept. 15 local time, a vote to end debate on the Clarity Act was 50 in favor and 49 against, falling short of the 60 votes required for passage. The vote did not decide the bill’s final passage, but it put a brake on efforts to set up a crypto market regulatory framework through legislation.

Republicans hold 53 Senate seats, meaning they needed Democratic cooperation to move the Clarity Act to the next stage. The bill fell short as all Democrats voted against it and some Republicans also opposed it. The industry had been confident it could secure enough support in the Senate, but the outcome differed.

The core of the Clarity Act is to divide cryptocurrencies into digital commodities and digital securities and separate the respective oversight authorities. Assets whose value is mainly tied to the use and operation of a blockchain network would be treated as digital commodities, while assets linked to investment contracts or centralized development and control would be classified as digital securities. Under the bill, digital commodities would fall under the U.S. Commodity Futures Trading Commission, while digital securities would be overseen by the U.S. Securities and Exchange Commission.

Senate negotiations ran into difficulties even before the August recess. Democrats demanded tighter limits on federal officials’ involvement with cryptocurrencies, and the issue of crypto-related business and financial interests of U.S. President Donald Trump’s family emerged as a focal point. The Republican Senate leadership on Sept. 13 and 14 put forward sweeping revisions reflecting Democratic demands. The 635-page substitute bill included provisions requiring some federal officials and judges, as well as spouses, to dispose of crypto holdings or move them into blind trusts, and it also restricted the issuance or sponsorship of certain tokens.

The revised proposal also included granting enforcement authority for related provisions to the Justice Department and state attorneys general. Tracking violations by state attorneys general was among items Democrats had sought during negotiations. Republicans released the revisions over the weekend to address Democratic concerns, but failed to reverse the remaining opposition. Democrats, until just before the vote, voiced dissatisfaction that the Republican negotiating team had not sufficiently accepted demands for ethical standards related to profits from the president’s crypto business.

With the bill stalled, prospects have become unclear for now for a clear federal regulatory framework at the congressional level. Efforts to define in law the respective responsibilities of the SEC and the CFTC have also returned to uncertainty. The industry and related groups had continued lobbying for months to secure bipartisan support, but the vote showed that even a recent compromise did not win enough backing to begin formal consideration.

Concerns from the banking sector also remain a separate variable. Banking groups have argued that provisions related to crypto platforms offering stablecoins and yield products would compete with existing deposits and could weaken the foundation of bank lending funding. The crypto industry and the White House did not accept those concerns.

In the short term, disappointment over the regulatory legislative setback dampened investor sentiment in the crypto market. According to Reuters, as the likelihood of the motion failing grew, bitcoin fell more than 5%, and shares of Coinbase and Circle dropped as much as 10% intraday. Still, because the vote was not a step that directly restricts crypto trading or issuance, the impact on prices is seen as stemming less from the failure itself than from concerns that regulatory uncertainty could be prolonged.

Over the medium to long term, exchanges, token issuers and institutional investors are expected to face a growing burden of operating without clear legal standards. If Congress fails to finalize an oversight framework in law, the classification of cryptocurrencies as securities or commodities and the scope of regulatory authority will for now depend on interpretations by the SEC and the CFTC. Such decisions by regulators could change with the administration’s policy stance or become the subject of legal disputes, and could also act as constraints on related companies’ product launches and investment decisions.