WASHINGTON — Senate Democrats on Tuesday blocked legislation to create a new regulatory framework for cryptocurrency, stalling an industry-backed effort to place new guardrails around digital assets after demanding more limits on President Donald Trump’s investments.

The 49-50 vote on whether to move forward with the legislation was a pivotal election-year test for the $2.3 trillion cryptocurrency market as the industry has pushed aggressively for a uniform set of rules. The Senate debate came as cryptocurrency companies…