Last week, in the background of the Senate’s desperate scramble to get through the backlog of agenda items that have been piling up all summer, a dramatic showdown of money and power took place over the cryptocurrency industry’s top legislative priority, the CLARITY Act, which would sort digital assets into different categories and split regulation—though regulation is a strong word for the proposed framework in the bill—between the Securities and Exchange Commission (SEC) and the smaller and more industry-friendly Commodity Futures Trading Commission (CFTC).

The crypto industry was hoping the threat posed by their $136 million war chest would scare enough Democrats to win the 60 votes necessary to overcome a…