Bitcoin (BTC) and the broader crypto market fell sharply after the Senate failed to pass the CLARITY Act. Senators voted 49-50 on a key procedural vote, short of the 60 votes required for the legislation to pass.

The market reacted quickly, with BTC dropping over 3% to a low of $74,887 on Tuesday before ultimately closing at $75,584. Ethereum (ETH) recorded a bigger decline, falling nearly 5% to a low of $2,356 before closing at $2,396. Ripple (XRP) fell over 8% in 24 hours and currently trades around $1.30. Other tokens registered similar declines, with the overall crypto market cap down 2.31%.

Clarity Act Fails to Advance

The Senate’s failure to pass the crucial legislation to a cloture vote keeps the market structure bill in limbo. The CLARITY Act would have laid out a clear regulatory framework by dividing oversight between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Several Senators across party lines withheld support for the legislation in its current form. Democratic Senators Angela Alsobrooks, Ruben Gallego, and Kirsten Gillibrand voted “No,” with several Republican Senators, including Susan Collins, Josh Hawley, Jerry Moran, and Thom Tillis, also voting against passing the legislation.

Tillis, who has previously worked on disagreements over stablecoin rewards and ethics, voted “No” and moved to recommit. This leaves the door open for another attempt to secure bipartisan support for the legislation.

Late Democratic Counteroffer

Democratic lawmakers introduced an amended version of the CLARITY Act hours before the scheduled vote. The counter addressed several ethics provisions and other provisions, and was submitted after discussions with Senate Minority Leader Chuck Schumer’s office. However, the counter was rejected by Republican lawmakers, who argued that the current version already included 126 changes requested by Democratic lawmakers.

Ethics Rules Remain Major Roadblock

Ethics concerns and disagreements remain the biggest hindrance to the bill despite President Trump accepting an amended version. The revised language put several restrictions on crypto interests and holdings held by the President, Vice President, members of Congress, federal judges, and relatives of government officials. It also allowed state Attorney Generals to pursue civil enforcement actions.

However, Democratic lawmakers argued the restrictions did not address crypto ventures linked to President Trump and his immediate family. The Democrats’ revised bill wanted to extend the rules to the children of federal officials as well. Senator Gallego accused President Trump of seeking “time to crime” and ruled out supporting the legislation in its current form.

Other provisions lawmakers failed to agree upon are stablecoin rewards, protection for developers, and event contracts that could conflict with existing state or tribal gambling rules. The banking industry has pushed back against stablecoin rewards, flagging concerns it could impact deposits in traditional financial institutions.

According to Lacie Zhang, research analyst at BitGet Wallet, markets had only partially priced in the Senate passing the CLARITY Act.

“The CLARITY Act appears to be only partially priced in. Prediction markets still imply a relatively low probability of enactment in 2026, suggesting the market is not positioned for certain passage.”

Zhang added that BTC faces far less regulatory uncertainty thanks to spot Bitcoin ETFs, which give investors regulated exposure to the asset. BTC’s custody and institutional trading systems are also more established.

“Bitcoin would likely benefit the least on a relative basis because its regulatory status, ETF access and institutional infrastructure are already comparatively clear.”

According to Zhang, Ethereum stood to benefit most if the regulation passed, given the network supports stablecoins, decentralized finance (DeFi), and tokenized assets, and faced substantial regulatory complications.

Institutions to Keep Building Under Existing Rules

Meanwhile, crypto companies and financial institutions in the industry are expected to continue building products despite the setback. However, the absence of a clear regulatory framework and legislation could hinder firms expanding their services. Jessica Martinez, policy director at Fireblocks, stated to crypto.news,

“The good news is that the market will keep moving whether Clarity passes or not. So the question becomes which entities are prepared to move with it.”

Major players in the cryptocurrency industry are already operating under current rules, while more cautious players are content with waiting things out.

Bitcoin and Crypto Take Hit

The failure to pass the CLARITY Act has had a tangible impact on the market. Data from CoinGlass revealed $668 million in total liquidations over the past 24 hours, of which $570 million were long positions, a clear sell-side tilt. Meanwhile, CoinMarketCap’s Fear & Greed Index slipped to 63, a notable decline from 71 recorded the week prior. The total crypto market cap has also slipped over 2% to $2.58 trillion.

BTC also retreated following the vote, dropping over 3% to $75,584 on Tuesday. The flagship cryptocurrency is currently trading around $75,669, maintaining a constructive bias. The price is also above the 50-day EMA around $73,566, and the 200-day EMA around $73,052, reinforcing the bullish bias. However, the Relative Strength Index (RSI) has slipped back into neutral territory, while the MACD suggests waning positive momentum.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Catch it at the first eye-sting

Bitcoin’s Coinbase COIN$171.98·Market Closed premium has fallen to its lowest level in four weeks, suggesting weakening U.S. demand as investors confront a setback for crypto legislation and the prospect of tighter monetary policy.

The premium measures the difference between bitcoin’s dollar price on Coinbase and its USDT price on Binance. CryptoQuant’s Coinbase Premium Index tracks that gap as a percentage of price. Tuesday’s reading of around -0.07% works out to roughly $50 on a $75,900 bitcoin – a thin margin but one that points to relatively weak buying demand on the U.S. exchange.

The discount has deepened to around -0.07% on Tuesday from roughly -0.02% a day earlier, as the Clarity Act failed to pass on Tuesday. That marks a reversal from late August and early September, when the premium turned positive for the first time in months, as bitcoin climbed towards $80,000. Bitcoin has since retreated to around $75,000.

Monetary policy presents another headwind. The Federal Reserve announces its decision later Wednesday, with markets widely expecting a 25-basis-point increase that would lift the federal funds target range to 3.75% to 4%.

U.S. prosecutors have charged two former Robinhood engineers with commodities fraud and wire fraud, alleging they used confidential information about upcoming cryptocurrency listings to profit from perpetual futures trades on the decentralized exchange Hyperliquid.

According to the U.S. Department of Justice (DOJ), Hefu Chai and Huaisong “Jerry” Xiang allegedly bought perpetual contracts linked to tokens shortly before Robinhood Crypto listings between 2025 and 2026. The DOJ says each defendant generated profits exceeding $50,000 from the trades.

Key takeaways

• The DOJ alleges Robinhood employees accessed a private Slack channel with planned listing dates and used it to trade perpetual futures on Hyperliquid.
• Prosecutors claim the defendants opened long positions ahead of listings and closed them after the tokens began trading on Robinhood.
• Prosecutors argue listing-related insider information cannot be “laundered” through derivatives—even in decentralized markets.
• Robinhood reportedly classified both engineers as “Coin Aware Individuals,” a group subject to explicit trading restrictions around announcements.
• The case draws parallels to earlier U.S. insider-trading litigation tied to token listings, but centers on perpetual futures rather than spot buying.

DOJ alleges insider info was used to trade perpetuals

In DOJ filings, prosecutors assert that Chai and Xiang had access to a private company Slack channel containing information about planned cryptocurrency listings. The core allegation is that this non-public information was then used to trade perpetual contracts tied to those tokens on Hyperliquid.

Prosecutors say the defendants traded ahead of Robinhood Crypto listing announcements by establishing long positions in advance and exiting when the contracts’ values rose following each token’s debut. According to the DOJ, profits exceeded $50,000 for each defendant.

From an investor and market-structure standpoint, the significance lies in how the alleged conduct bridges centralized listing workflows and decentralized derivatives venues. If the allegations are upheld, it suggests that the risks tied to confidential listing information extend beyond traditional spot markets and into the faster-moving perpetual futures segment.

What Robinhood’s internal policy reportedly restricted

The DOJ complaints describe how both engineers were given expanded visibility into future token listings at Robinhood. Chai worked at Robinhood from around 2021 until May 2026 and served as a technical lead responsible for new digital-asset listings. Xiang worked there from around 2024 until September 2026 as a software engineer involved in crypto listings.

Robinhood reportedly designated both men as “Coin Aware Individuals,” granting them access to the private Slack channel that prosecutors say contained planned listing dates. The company’s policy, according to the DOJ, prohibited members of this group from trading on Robinhood or any other platform during a window beginning 24 hours before a listing announcement and extending through 24 hours after.

Prosecutors allege the trading occurred anyway. The DOJ specifically cites at least 10 listing-related token announcements associated with Chai, including MEW, MOODENG, ASTER, XPL, HYPE, ENA, AERO, and others. For Xiang, prosecutors allege he began trading Popcat (POPCAT) perpetuals in March 2025 and then traded ahead of at least 10 additional listing announcements.

Derivatives markets and earlier insider-trading parallels

The DOJ’s theory echoes an earlier U.S. insider-trading case tied to token listings. Cointelegraph previously reported on a 2023 Coinbase insider-trading matter involving a former employee who allegedly used confidential information to profit by directly buying tokens slated to be listed. In that earlier dispute, the conduct involved spot acquisition of the underlying asset.

Here, the DOJ allegations extend the listing-insider concept into derivative markets. Instead of buying the underlying tokens, prosecutors say Chai and Xiang used perpetual futures contracts on Hyperliquid to capture price movement around the listing event.

This distinction matters because perpetuals can react quickly and may concentrate leverage and market impact around catalysts. If confidential information is used to time derivatives positions, regulators may argue that it produces a similar unfair advantage to spot-based insider trading—just expressed through a different instrument.

Charges, potential penalties, and the status of the case

U.S. Attorney Jamie McDonald said in connection with the charges that corporate insiders cannot evade commodities and securities laws by trading misappropriated information through perpetual futures, tokenized securities, or similar instruments.

Each defendant faces one count of violating the Commodity Exchange Act, carrying a maximum prison sentence of 10 years, and one count of wire fraud, carrying a maximum of 20 years, according to the DOJ filings. Prosecutors emphasize that the charges are allegations and that both defendants are presumed innocent unless convicted.

Cointelegraph contacted Robinhood for comment, but did not receive a response by the time of publication.

For traders and platform users, the next watch points are the court filings and any eventual rulings that clarify how U.S. prosecutors will frame insider information cases involving decentralized derivatives. The broader question—whether listing workflows, private communications, and faster perps execution can be treated consistently under commodities law—will likely shape how future enforcement efforts approach token listing intelligence.