The cryptocurrency market faced renewed headwinds from Washington as a pivotal legislative effort to ease the tax burden on U.S. crypto users failed to pass the Senate. An amendment proposed by Senator Cynthia Lummis, intended to be part of a major budget bill, was ultimately excluded, leaving key tax uncertainties unresolved. This development has cast a shadow over market sentiment, contributing to price pressure on major digital assets. The proposal aimed to introduce several industry-friendly changes, including waiving capital gains taxes on crypto transactions under $300 and clarifying the tax treatment of staking and mining rewards. According to the Digital Chamber, a crypto advocacy group, the current system unfairly taxes these rewards twice: once upon acquisition and again upon sale. The Lummis amendment sought to align policy with actual income by taxing these assets only when they are sold, a change that would have significantly benefited proof-of-stake ecosystems like Ethereum and Cardano.

Crypto Prices Tumble as Tax Hopes Fade

The market's reaction to the legislative setback was swift and negative, with major altcoins experiencing notable declines. Ethereum (ETH), a direct beneficiary of potential staking tax clarifications, saw its price retreat. The ETHUSDT pair fell by 0.87% over the past 24 hours, dropping to $2,549.58. The asset struggled to maintain its footing after reaching a 24-hour high of $2,633.47, ultimately breaking below key psychological support at $2,600 and finding a temporary floor at $2,530.84. This downward pressure is also evident in its performance against Bitcoin; the ETHBTC pair declined by a sharp 2.47% to 0.02330000, indicating that Ethereum is underperforming the market leader amid the heightened regulatory uncertainty. The failure to pass the amendment means that the ambiguity surrounding the taxation of staking rewards, a core component of Ethereum's network security and tokenomics, will persist as a significant overhang for investors and network participants.

Solana and Cardano Follow Broader Market Downturn

Other major layer-1 protocols also felt the impact of the bearish sentiment. Solana (SOL) saw its price drop by 1.25% to $150.23 on the SOLUSDT pair. After peaking at $154.83, SOL experienced a sell-off that pushed its price down to a low of $145.00, testing a critical support zone before staging a minor recovery. Traders will be closely watching the $145-$150 range as a key battleground. A sustained break below this level could signal further downside potential. Meanwhile, Cardano (ADA) registered a more significant loss, falling 2.64% to $0.5834. The ADAUSDT pair saw considerable selling pressure, evidenced by a high 24-hour volume of over 95 million on the pair. The price tumbled from a high of $0.6069, losing the important $0.60 support level and hitting a low of $0.5754. The failure of the tax amendment is particularly relevant for ADA holders, as Cardano's ecosystem is heavily reliant on staking. The continued lack of tax clarity could deter participation and investment in the network.

From a trading perspective, the legislative failure introduces a new layer of risk and reinforces the importance of monitoring the macroeconomic and regulatory landscape. The proposed amendment would have also addressed the "wash sale" rule for crypto, which currently allows investors to harvest tax losses in a way that is prohibited in traditional securities markets. Closing this loophole has been a long-standing goal for lawmakers, and its exclusion from the bill means the status quo remains, for now. For traders, this means that while the broader market is grappling with bearish news, specific tax-related trading strategies remain viable. However, the overarching takeaway is one of caution. The market has retreated from recent highs, with key technical support levels for ETH, SOL, and ADA now in focus. Without a positive catalyst to counteract the regulatory disappointment, the path of least resistance may be sideways or downwards in the near term as the market digests the implications of Washington's latest decision.