Bitcoin's Price is Falling - Investors Await Vote on Cryptocurrency Regulation Bill in the US

The price of Bitcoin fell on Tuesday as investors await a vote in the US Senate on a major cryptocurrency regulation bill — the Clarity Act. The market also reflected caution ahead of the Federal Reserve's (Fed) upcoming decision.

The price of the world's largest cryptocurrency dropped 2.4% to $76,266. In the previous session, Bitcoin managed to recover some of its losses after reports emerged that US President Donald Trump had agreed to add new ethics restrictions to the Clarity Act.

Prices of other major crypto assets also mostly declined. Investors' risk-aversion sentiment strengthened after a key US Treasury yield approached its highest level in nearly two decades. In addition, escalating conflict in the Middle East put additional pressure on oil prices.

Cryptocurrencies are also being affected by anticipation of the Fed's meeting. The central bank is set to consider a 25-basis-point interest rate hike on Wednesday, which is creating additional pressure on risk assets.

Senate to vote on Clarity Act on Tuesday

The US Senate plans to vote on Tuesday on advancing the Clarity Act. The bill needs at least 60 votes to clear a procedural stage in the Senate. Republicans hold 53 seats, meaning they will need the support of at least seven Democratic or independent senators.

Republican Senator Cynthia Lummis has been actively working to secure Democratic support. According to her, Donald Trump has agreed to new ethics provisions in the bill that would restrict federal officials from leveraging cryptocurrency-related interests and engaging in certain types of transactions.

Tightening ethics rules was one of the main demands of Democratic senators. The updated bill also grants state attorneys general certain powers to take legal action in cases where federal officials violate ethics rules.

Another major point of disagreement over the bill concerns rules for paying yield on stablecoins and the division of digital asset regulatory authority between the US Securities and Exchange Commission and the Commodity Futures Trading Commission.

The Clarity Act is considered one of the most significant attempts at comprehensive cryptocurrency regulation in the US. Its supporters say the bill would make the legal status of digital assets clearer and encourage institutional participants to enter the market.

However, the bill's future remains uncertain. Despite the recent changes, the proposed ethics restrictions are not sufficient for some Democrats, which means securing 60 votes remains a significant challenge.