Bitcoin and crypto stocks dropped Tuesday after the Senate blocked Trump-backed legislation that would've established an industry-friendly regulatory framework for cryptocurrencies and digital assets.

In the late afternoon, bitcoin was down 4.6% at around $75,633, according to CoinGlass. Shares of bitcoin holding company Strategy finished the trading day down 5.4% at $129.60. The crypto exchange Coinbase closed the day down 10% at $172.11.

Earlier Tuesday, the closely watched Clarity Act drafted by Senate Republicans fell short of the 60 yes votes it needed to be advanced to a formal floor vote, killing the bill's chances of getting passed ahead of November's midterm elections.

The loss, which came in a 49-to-50 vote, is a blow to the crypto industry as it wrangles with its deep financial connections to President Trump.

Senate Democrats had voiced concerns that the Clarity Act lacked safeguards against political self-dealing in the crypto industry. Sen. Elizabeth Warren, D-Mass., said ahead of the vote that the bill wouldn't prevent Trump from continuing to profit from his own crypto ventures while using his political power to boost the industry.

The bill was pushed by Sen. Cynthia Lummis, R-Wyo., chair for the Senate Banking Digital Assets Subcommittee, who said the latest draft included ethics provisions that Trump had agreed to, along with more than 100 other concessions secured by Democrats after years of bipartisan negotiations, Lummis said at a conference on Monday.

"This is not a partisan bill, not even close," Lummis told senators before the vote on Tuesday.

Democrats ultimately rallied against the measure, including Sen. Kirsten Gillibrand of New York, who has worked with Lummis on crypto legislation and was praised by Lummis on Monday for her help in moving the Clarity Act forward. Four Republicans joined the Democrats in dissent.

Prediction-market traders have been persistently skeptical about legislation making it across the finish line this year. Polymarket put the probability of the Clarity Act becoming law in 2026 at 31% Monday morning, its highest level all month. That probability fell to 5% on Tuesday.

Polymarket has a data sharing partnership with Dow Jones, publisher of Dow Jones Newswires and the Wall Street Journal.

The loss puts pressure on crypto prices after a rally this past summer, driven in part by optimism around the bill along with currency devaluation fears.

Bitcoin rose around 25% between Aug. 19 and Aug. 25, and climbed above $82,000 at the start of September before pulling back. Investors have recently viewed $80,000 as an opportunity to sell, said Stephen Coltman, head of macro at 21Shares.

Investors are also still awaiting the Federal Reserve's interest-rate decision Wednesday. Analysts have pointed to the Fed decision as a potential catalyst for bitcoin as it struggles to regain the $80,000 level.