Senate Democrats are mounting a fresh push to rewrite the CLARITY Act’s ethics provisions after dismissing the White House-backed proposal unveiled by GOP senators, according to Politico.
Senator Ruben Gallego blasted the latest draft and said that the proposal Republicans sent back was “not a serious effort” despite months of bipartisan negotiations.
Dispute Deepens in Senate
At the center of the dispute is how to prevent President Donald Trump from profiting from digital assets. Democrats insist they cannot support ethics rules that are enforceable only by the Department of Justice. Negotiations involving Gallego, Senators Cynthia Lummis and Bernie Moreno, and the White House ultimately collapsed over whether state attorneys general should also have authority to enforce the provisions.
In an interview on Thursday, Gallego said,
“I can’t imagine that that’s a serious effort – after all the work that we’ve done with our Republican colleagues, that they would take the months and months of work and somehow interpret that and turn around and think what they offered was even remotely close.”
Gallego added that he is now working with Senator Thom Tillis and other unnamed Republicans on a counterproposal, while insisting, “We are still in this fight.”
Lummis defended the proposal while Tillis said the White House-approved language was “good,” but acknowledged that further changes may be necessary to secure the 60 votes needed to advance the legislation. Tillis added that another round of discussions with the White House is expected to determine whether additional revisions would be “acceptable” to the president.
The disagreement has also put the bill’s timeline in doubt. Senate Majority Leader John Thune said that he no longer expects the Senate to pass either the CLARITY Act before lawmakers leave for the August recess.
Hopes that the CLARITY Act could provide the US crypto industry with long-awaited regulatory clarity have been one of the factors supporting bullish expectations for the market this year. However, prediction market odds of the bill’s passage declined amid disagreements over ethics provisions and other issues that have slowed negotiations.
Middle Ground
Coinbase CEO Brian Armstrong recently warned that parts of the company’s business could move overseas if the US fails to pass clear crypto legislation. While Coinbase wants to keep most of its operations in the country, the exec said regulatory clarity is needed to prevent capital, businesses and users from shifting offshore.
Amid the ongoing standoff, crypto commentator Crypto Sensei recently proposed a compromise to break the deadlock. In a recent post on X, he suggested keeping the DOJ as the primary enforcer while imposing statutory deadlines for investigations, creating an independent ethics review body to oversee DOJ decisions, and allowing state attorneys general to intervene only under limited conditions if the DOJ fails to act.
He also called for annual disclosures detailing ethics complaints, investigations, and enforcement actions for greater transparency.
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