Bitcoin's reaction (I'll be back with more on this soon ... ADDED: Clarity failure: What the BTC/USD chart is showing, and what to watch next ) reflected weeks of pricing in a likely defeat, with the token already lower through the Asian and European sessions before cloture was confirmed to have failed. The result removes, for now, the prospect of a unified federal framework for digital asset classification, and traders are treating it as confirmation that crypto oversight will keep running through SEC and CFTC rulemaking rather than statute. Coinbase and other listed crypto-exposed names extended losses alongside bitcoin, while XRP, whose commodity status the bill would have codified, gave back part of its earlier gains. The relatively contained scale of the move suggests much of the downside had already been priced in, given how far prediction markets had already cut the odds of passage.---Earlier:investingLive European news wrap: Crypto markets sink ahead of Clarity Act vote---The Senate's failure to advance the Clarity Act leaves crypto regulation to the SEC and CFTC, at least for this Congress.Summary:Senate cloture vote on the Digital Asset Market Clarity Act failed on Tuesday, short of the 60 votes needed to advance the billThe bill would have split crypto oversight between the SEC and CFTC and set federal rules for classifying tokens as securities or commoditiesDemocrats withheld support largely over ethics provisions seen as too weak to restrain the president's crypto business interests, and over stablecoin yield language opposed by banksBitcoin extended a multi-day slide, falling back toward the high $76,000s after topping near $79,500 overnightSponsor Senator Cynthia Lummis indicated negotiations were unlikely to continue after the defeatWith a more divided Congress expected after the midterms, comprehensive crypto market structure legislation is unlikely to advance again this yearThe US Senate failed on Tuesday to advance the Digital Asset Market Clarity Act, falling short of the 60 votes needed on a procedural cloture motion and dealing the biggest setback yet to Congress's attempt at a comprehensive crypto market structure law. More than 40 senators voted against the motion, according to the unofficial floor tally, ending, for now, the bill's path toward a floor debate and final vote.The legislation would have drawn a permanent line between the Securities and Exchange Commission and the Commodity Futures Trading Commission, assigning oversight of digital assets according to whether a token is classified as a security, a commodity, or a stablecoin. It would also have written into federal law the commodity status of tokens such as XRP, a status currently shaped mainly by agency guidance and court decisions rather than statute. The House passed its own version of the bill in July last year by a wide bipartisan margin, and the measure cleared the Senate Banking Committee in May with support from a small number of Democrats.Tuesday's failure came down to arithmetic Republicans could not overcome without further crossover support. With 53 seats, the party needed at least seven Democratic votes, and Democrats had spent recent weeks pushing back on two parts of the bill in particular: ethics provisions they viewed as insufficient to restrain the president's crypto related business interests, and a stablecoin rewards provision opposed by banking groups on the grounds it could pull deposits out of the traditional banking system. Senator Cynthia Lummis, one of the bill's lead Republican sponsors, indicated after the vote that she saw little prospect of reviving negotiations this term, having offered Democrats more than a hundred requested changes to the text over the past year.Bitcoin had already been retreating through the Asian and European sessions as traders priced in the likelihood of defeat, slipping from an overnight high near $79,500 to the high $76,000s. The scale of the move was relatively contained given how widely the outcome had been anticipated, with prediction markets having cut the odds of the bill becoming law this year to well under 20 percent in the days before the vote.The defeat leaves federal crypto oversight to continue running through SEC and CFTC rulemaking and enforcement action rather than a single statute, an outcome industry groups have long argued creates uncertainty for exchanges, issuers and custodians. With control of Congress expected to be more divided after the November midterms, most observers now see little chance of a comprehensive market structure bill returning to the Senate floor before 2027 at the earliest. This article was written by Eamonn Sheridan at investinglive.com.