The crypto industry's top legislative priority failed on Tuesday in spectacular fashion, as the so-called Clarity Act didn't come close to getting the support needed to advance in a Senate vote.

A procedural motion to advance the bill failed by a vote of 49 to 50, with a handful of Republicans joining all Democrats to shoot it down. The motion needed 60 yes votes to pass, and with the midterm elections looming, the Senate isn't expected to pick the bill back up this year.

Among other provisions, the bill would have taken most crypto trading out of the purview of securities regulators, a key goal of firms like Coinbase Global.

On Tuesday, as the outcome of the vote became clear, Circel fell over 11%; Coinbase Global extended its losses to more than 10%, while Bitcoin treasury company Strategy sank 5.4%.

The vote is especially bitter for the crypto industry, which has spent hundreds of millions of dollars on lobbying and campaign expenditures over the past year to even get to this point. Crypto regulation doesn't even register among the issues voters care most about, and the industry has created massive political action committees to insert itself into the Washington agenda and strike fear into the hearts of lawmakers who might oppose them.

President Donald Trump last month rallied crypto executives at the White House in support of the bill, but ultimately it was his own crypto entanglements that helped sink it. Trump earlier this year disclosed he made well over $1 billion from crypto-tried investments, including from World Liberty Financial, the firm he co-founded. Democrats who voted against the bill said that it needed to do more to rein in his crypto dealings to get their support.

Some GOP lawmakers also voted against the motion after pressure from community bank executives. Bankers argued that the bill needed a stronger ban on high-yield crypto accounts to protect their deposits, a contention that crypto executives and the White House said was nonsense.

The effort to pass a comprehensive crypto bill could be dead for years. Democrats are favored to take control of the House of Representatives in the midterm elections, and it's unlikely they would choose to pursue a crypto bill ahead of other priorities.

"The inability to reach a negotiated solution means that Congress is not likely to pass a digital asset market structure bill during the lame duck session" or in the next Congress, wrote Compass Point Research & Trading analyst Ed Groshans in a research note after the vote. Groshans said the bill was likely tabled until at least 2030.

Before the vote, Sen. Cynthia Lummis (R., Wyo.), one of the industry's biggest proponents, told reporters that Tuesday's motion would effectively be do-or-die. If the vote fails, "we're done. It's over," she said.

Instead, crypto firms will be leaning heavily on Trump's regulators at the Securities and Exchange Commission, Commodity Futures Trading Commission and Treasury Department, all of whom have said they plan to move swiftly to implement industry friendly rules if a bill didn't pass.

The SEC has already dropped all major enforcement actions against crypto firms and has begun to introduce rules that make it easier to raise money from crypto sales without running afoul of the law. The agency is also expected to implement rules making it easier to tokenize traditional assets like stocks.

The friendly regulatory environment will in effect give the industry a little more than two years to sink roots into the traditional financial system and consumers' wallets. Even if the SEC took a harsh view of the industry in the future, as it did in President Joe Biden's administration, the agency at that point might find it difficult to put the genie back in the bottle.