Why Did the US House Reject the Crypto Regulation Bill?

On July 16, 2025, the U.S. House of Representatives rejected key cryptocurrency bills in a 196-222 vote, leaving the crypto industry in limbo. Political clashes and concerns over regulation details derailed the process, sparking market uncertainty. Let’s dive into why this happened, its impact, and what’s next for crypto regulation.

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The Crypto Bills at the Center

The rejected bills aimed to regulate the crypto space. The GENIUS Act targeted stablecoins like Tether (USDT) and USDC, setting rules for issuers to hold reserves and comply with anti-money laundering laws. 

The CLARITY Act sought to clarify whether digital assets are securities (under SEC) or commodities (under CFTC). The Anti-CBDC Surveillance State Act aimed to block a central bank digital currency, citing privacy risks. These bills, part of “Crypto Week,” were meant to position the U.S. as a crypto leader.

Why the House Said No

The vote turned into a political tug-of-war. Twelve Republicans, including Reps. Marjorie Taylor Greene and Chip Roy, opposed the procedural vote, demanding a single, unified bill. Greene also questioned the Anti-CBDC bill’s strength against government overreach. 

Meanwhile, 210 Democrats voted against, citing weak consumer protections and concerns over President Trump’s ties to World Liberty Financial, a crypto firm that earned him $57 million in 2024. Critics like Sen. Elizabeth Warren argued for stronger anti-corruption measures.

Read Also: US House Receives Stablecoin GENIUS Act Bill, Will It Spur Stablecoin Growth?

Market and Industry Reactions

The rejection rattled markets. Shares of Circle (USDC issuer) dropped 7%, Coinbase fell 4%, and MARA Holdings dipped 2%. Tether (USDT) stayed stable at $1.00, though its 90-day price rose 3.06%, hinting at sensitivity to regulatory news. 

A similar stall in 2021 briefly shook USDT, and traders now brace for volatility. X posts showed mixed views, cheered the rejection as a win against overregulation, while others noted short-term uncertainty but stayed bullish on crypto’s future.

Why Regulation Is Key

Stablecoins, with a $250 billion market cap, are vital for crypto trading and payments. The GENIUS Act could have boosted trust by ensuring reserve backing, reducing risks like past stablecoin failures. 

Without clear rules, businesses face compliance issues, and investors hesitate. Nic Puckrin of The Coin Bureau noted that regulation could lower fees and attract institutional players, but the delay keeps the industry in flux.

Read Also: White House Says This Stablecoin Rule Could Push Crypto to $20 Trillion

The Road Ahead for Crypto Laws

President Trump, vocal on Truth Social, called the bills a step toward U.S. crypto leadership. He claimed to have swayed 11 of the 12 Republican holdouts in a White House meeting. 

House Speaker Mike Johnson confirmed ongoing talks to merge the bills or find a compromise, aiming to pass the GENIUS Act by August and address market structure rules by September.

Legislative Hurdles

The House chose to vote on the Senate’s GENIUS Act, which passed 68-30, but merging it with other bills is tricky. Republicans want a unified package, while Democrats demand stronger safeguards. The CLARITY Act, lacking a Senate version, faces a tougher path despite bipartisan committee support (47-6 in Agriculture, 32-19 in Financial Services).

What’s at Stake?

The U.S. risks losing ground in the global crypto race. Europe’s MiCA framework, effective since January 2025, gives the EU an edge. Sen. Bill Hagerty warned that without action, stablecoin innovation could shift overseas, weakening U.S. financial leadership. The GENIUS Act aimed to keep the dollar dominant in crypto, but the delay fuels uncertainty.

Innovation vs. Oversight

The crypto industry, which spent $250 million in 2024 to back pro-crypto candidates, sees regulation as a balancing act. Clear rules could legitimize digital assets, but heavy-handed laws might stifle growth. The House’s rejection reflects this divide, with some prioritizing freedom and others demanding protections against fraud and market risks.

Read Also: White House Crypto Summit: Market Braces for Turmoil Amid Policy Shifts

Conclusion

The House’s rejection of the crypto bills on July 16, 2025, stemmed from political divides over government control, consumer safety, and regulatory clarity. Markets felt the shock, but stablecoins like USDT held firm. With Trump and GOP leaders pushing for a revote, the industry awaits a clearer path. The coming weeks will decide if the U.S. can catch up in the global crypto race or stay stuck in regulatory gridlock.

FAQ

What is the GENIUS Act and why does it matter?

The GENIUS Act sets reserve and AML rules for stablecoins like USDT and USDC. It aims to boost trust and attract institutional players.

Why did the U.S. House reject the crypto bills on July 16, 2025?

Political infighting, lack of unified support, and concerns over Trump’s crypto ties led to the 196-222 vote failure.

What impact did the rejection have on crypto markets?

It triggered short-term drops in stocks like Circle and Coinbase, but USDT stayed stable, hinting at long-term resilience.

What's blocking the CLARITY Act from passing?

It lacks a Senate version and faces disagreement over whether crypto assets fall under SEC or CFTC regulation.

Can the U.S. still lead global crypto regulation?

Yes, but delays give Europe an edge with MiCA in place. U.S. needs fast action to keep the dollar strong in crypto.

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