Clarity Act Stalls in Senate Amid Disputes Over Ethics Provisions

Author | Azuma (@azuma_eth)

With only a few working days remaining before the U.S. Congress enters its summer recess (expected to begin on August 7), time is running out for the Digital Asset Market Structure Act (hereinafter referred to as the Clarity Act) to pass through the Senate.

Last week, the White House agreed to include an "ethics provision" in the Clarity Act designed to restrict the president, vice president, members of Congress, and other federal officials from profiting from digital assets while in office. This move was widely interpreted by the market as signaling that Trump and the Republicans had shown a willingness to compromise, aiming to reach consensus with Democratic senators on the last major point of disagreement: ethics.

However, with the release of the detailed amendments to the Clarity Act, the market found that the situation is far more complex than initially imagined.

Galaxy research head Alex Thorn posted over the weekend that the Clarity Act has reached the final "one-yard line," much like in American football, where this final yard may be the most difficult on the field—and in politics, a battle for every inch... Given the limited time remaining and strong opposition from Democratic lawmakers to the current wording of the ethics provisions, the probability of the bill being enacted by 2026 has been lowered to 30%.

Alex Thorn concluded in his article that the Clarity Act still faces varying degrees of disagreement on multiple fronts, including developer protections, the regulatory boundaries of DeFi, restrictions on stablecoin yields, CFTC registration mechanisms, and new enforcement provisions.

However, the current general consensus in the market is that the biggest remaining point of contention blocking the bill’s progress still lies in the ethical provisions, previously interpreted as a concession by Trump and the Republicans.

According to the latest published Senate consolidated text, the Clarity Act comprises 616 pages, with newly added ethics provisions primarily aimed at restricting the president, vice president, members of Congress, and other senior federal officials from participating in digital asset-related activities. These provisions prohibit such officials and their spouses from issuing or promoting digital assets during their term, restrict the listing of related assets on regulated platforms, mandate disclosure of interests, and introduce blind trust mechanisms. Additionally, the provisions designate the Department of Justice (DOJ) as the enforcing authority and stipulate that these measures will automatically expire on January 20, 2029, following the end of Trump’s term.

The issue is that the Democratic Party believes the current version of the ethics clause still has significant shortcomings.

• First, the Democratic Party believes that entrusting enforcement authority solely to the Department of Justice lacks sufficient independence. Since the Department of Justice is part of the executive branch, and the current acting Attorney General, Todd Blanche, also served as Donald Trump’s former personal attorney, the effectiveness of internal oversight is questionable when the targets include the president or senior executive officials. Therefore, the Democrats demand that enforcement authority be transferred to various attorneys general.
• Second, the automatic expiration clause in 2029 has drawn strong criticism from Democrats. This timing coincides precisely with the end of Trump’s current presidential term, meaning that after Trump leaves office, his successors would have no legal basis to investigate his past actions. Democrats argue that if the Clarity Act aims to establish a long-term regulatory framework for digital assets, ethical standards should be institutionalized permanently, rather than expiring with Trump’s presidency.
• In addition, Democrats are concerned that the current scope of restrictions remains limited. The existing version primarily targets direct issuance or promotion of digital assets, but does not clearly restrict participation in cryptocurrency gains through affiliated companies, family members, or other indirect means—especially given that several of Trump’s sons are deeply involved in the cryptocurrency industry. It remains uncertain whether the current version provides adequate coverage.

Senator Elizabeth Warren, a longstanding and vocal critic of the bill, last week issued a formal statement condemning the ethics provision’s “DOJ enforcement only” mechanism, stating that the bill “should be vetoed upon receipt.”

More impactful to the vote count was a joint statement issued by seven Democrats—who have been negotiating with Republicans (Senators Mark Warner, Angela Alsobrooks, Cory Booker, Catherine Cortez Masto, Ruben Gallego, John Hickenlooper, and Raphael Warnock)—stating that the current text “falls short of expectations.”

Regarding the Republican side, there appears to be no further signs of concession in the face of strong Democratic opposition. Patrick Witt, Executive Director of the White House Digital Assets Advisory Council, stated firmly that the President has already made historic concessions, yet the Democrats remain unsatisfied—“You can’t hit two home runs in one swing.”

Early this morning, Senate Majority Leader John Thune indicated that the Clarity Act will be temporarily put on hold to prioritize the confirmation of government nominees and the Russia sanctions bill. Additionally, the Senate will dedicate Tuesday and Wednesday this week to the funeral of the late Senator Lindsey Graham.

This means that the window for advancing the Clarity Act before the summer recess has been further narrowed. Current market expectations suggest that the Clarity Act may not reach a vote until next week—the final days before the Senate adjourns.

Former Senator Anne Kelley also posted on X today, stating that under Senate rules, once a cloture motion is invoked on a controversial and significant bill, that bill becomes the Senate’s top priority—making it practically impossible for the Senate to simultaneously advance another contentious major bill until amendments have been considered, cloture is invoked again, and up to 30 hours of formal debate have elapsed.

This means that the Clarity Act must not only contend with its own ability to resolve disagreements in a timely manner but also compete with other contentious bills—such as the Russian sanctions bill, the budget bill, and the SAVE bill—for the Senate’s limited voting time.

This is why, despite initial market expectations that the Clarity Act would pass before the recess, an increasing number of Washington observers are lowering their expectations.

For the cryptocurrency industry, this prolonged legislative battle has now entered its final stage. The regulatory framework is just one step away from implementation, but whether that final step will be taken in the coming days or postponed to an uncertain future will soon be revealed.