Key facts
- U.S. spot Bitcoin ETFs saw outflows of $450.4 million on Tuesday, the largest since June 24.
- The Senate failed to advance the Digital Asset Market Clarity Act with a 49-50 vote.
- Fidelity's FBTC saw the largest outflows at $214.8 million, followed by BlackRock's IBIT at $161.7 million.
- Ethereum ETFs lost $142.3 million, and XRP funds remained flat.
- The Clarity Act aimed to split oversight between the SEC and CFTC and legalize most crypto trading in the U.S.
- Senator Cynthia Lummis called the bill's failure a likely death sentence.
U.S. spot Bitcoin exchange-traded funds (ETFs) experienced their worst day since June 24, with outflows totaling $450.4 million on Tuesday. This significant withdrawal followed the Senate's failure to advance the Digital Asset Market Clarity Act, a bill intended to establish a regulatory framework for the cryptocurrency market. The bill needed 60 votes to proceed but fell short, receiving only 49 votes in favor and 50 against.
Fidelity's FBTC saw the largest outflows, with $214.8 million pulled, followed by BlackRock's IBIT, which lost $161.7 million, and Grayscale's GBTC, which shed $44.1 million. Smaller withdrawals were observed from ARK 21Shares and Bitwise funds. Ethereum ETFs also experienced substantial outflows, losing $142.3 million, while XRP funds remained flat.
The Digital Asset Market Clarity Act aimed to divide regulatory oversight between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), effectively legalizing most cryptocurrency trading in the United States. Senator Cynthia Lummis, a lead negotiator for the bill, expressed strong disappointment, stating that the failure was likely a death sentence for the legislation in its current form and criticized Democrats for not acting in good faith. Senator Elizabeth Warren had opposed the bill, citing concerns about a potential 'crypto-fueled economic crash'.
Regulatory clarity is considered crucial for institutional investors, such as pension funds and banks, to treat Bitcoin as a standard financial product. The lack of such clarity may have contributed to institutional money remaining on the sidelines. While the bill's immediate future appears bleak, some in the crypto industry view the outcome as a setback rather than a definitive defeat, with a small window of opportunity remaining before midterm campaigning intensifies.