Backed Crypto Regulation Bill Faces Major Setback in U.S. House as Republican Lawmakers Defect

The U.S. House of Representatives voted down a key procedural motion on Tuesday related to several cryptocurrency bills endorsed by former President Donald Trump. The motion was defeated by a vote of 196 in favor and 223 against, with 13 Republican lawmakers joining Democrats in opposition. The House leadership has tentatively planned a second vote later on Tuesday to revive momentum behind the legislation, though it remains uncertain whether the same set of rules and bills will be presented or if revisions will be made to accommodate dissenting voices.

The failed vote significantly impacted market sentiment. Bitcoin declined by 2.66% on the day, while shares of stablecoin company Circle temporarily dropped by more than 7%. Analysts described the legislative defeat as a notable blow to the crypto industry, which had viewed the passage of these bills as a regulatory breakthrough.

House Speaker Mike Johnson stated that opposition within the party stemmed from some members’ insistence on combining several cryptocurrency-related bills, such as the Clarity Act and legislation against central bank digital currencies, into a unified proposal. Johnson emphasized that efforts were ongoing to coordinate with the White House and the Senate, noting that although consensus on the individual bills exists, disagreement persists over the preferred legislative format.

The vote came during what has been dubbed “Crypto Week” in Washington. Earlier in the day, Trump had used his Truth Social platform to express strong support for the proposed legislation, urging all Republican House members to vote in favor. He highlighted the GENIUS Act as essential to securing the United States’ leadership in digital assets, calling it a landmark policy that would outpace global competitors.

The vote’s failure triggered a selloff in crypto-related equities. Circle's stock ultimately closed down by approximately 4.5%, while Coinbase saw its shares drop as much as 4% before narrowing losses to 1.4%. Shares of digital asset firm MARA Holdings fell as much as 2%, ending the session down around 1.8%. Despite the decline, Circle's stock still trades at more than six times its IPO price. The company issues USDC, the world’s second-largest dollar-pegged stablecoin, commanding a market share of approximately 24%.

The GENIUS Act, which already passed in the Senate last month, would introduce the first federal regulatory framework for stablecoins. It includes provisions such as full reserve backing, monthly audit obligations, and a regulatory pathway for private companies to issue government-approved digital dollars. The bill is viewed as a significant milestone for the digital asset industry and a political win for Trump, who has consistently advocated for aligning government policy with blockchain innovation.

U.S. Treasury Secretary Besant projected that if enacted, the bill could expand the U.S. stablecoin market eightfold to over USD 2 trillion. David Sacks, the White House advisor on AI and crypto, had previously stated that the legislation could create demand worth “trillions of dollars” for U.S. Treasuries virtually overnight.

Just hours prior to the House vote, Fairshake—recognized as the most influential political action committee in the crypto industry—disclosed it held USD 141 million in cash to pursue favorable regulatory outcomes and support pro-crypto candidates in the 2026 midterm elections.

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