A group of Senate Democrats who generally support crypto legislation has said the latest draft of the CLARITY Act still falls short, raising objections to its ethics, consumer protection, illicit finance, conflicts of interest, and market integrity provisions.
Their statement adds another hurdle for legislation that already needs bipartisan backing to reach the 60-vote threshold required in the Senate.
Democrats Push Back on Latest Draft
The updated draft, released by Senate Republicans on July 22, includes an ethics package negotiated between the White House and Republican Senators Cynthia Lummis and Bernie Moreno. The proposal would bar the president, vice president, members of Congress, federal judges and certain other officials, along with their spouses, from issuing or sponsoring digital assets for compensation while in office, with the restriction expiring on January 20, 2029.
Covered officials would also have to divest crypto holdings or place them in qualified blind trusts, while the Department of Justice would receive civil enforcement authority, including the ability to sue exchanges that list banned tokens.
However, after the updated draft was shared with Democratic lawmakers, Senators Angela Alsobrooks, Cory Booker, Catherine Cortez Masto, Ruben Gallego, John Hickenlooper, Mark Warner, and Raphael Warnock released a joint statement noting that the language on ethics and several important sections was still not strong enough.
“The Republican-proposed text of the CLARITY Act as it currently stands falls short,” their statement read. “Key provisions including those addressing ethics for elected officials, consumer protection, illicit finance, conflicts of interest and market integrity must be strengthened.”
The lawmakers added that they had worked “in good faith” with Republican colleagues for the past year and would continue doing so until the bill was passed.
Speaking during a public appearance, Senator Alsobrooks called the proposal to place enforcement solely with the DOJ “wild and unserious and stone-cold crazy,” arguing that state attorneys general should have enforcement powers.
Securities lawyer Amanda Fischer went further in a social media thread, writing that the draft “doesn’t change much at all about Trump’s existing crypto grift” since it doesn’t force any immediate divestment and leaves enforcement to Trump’s own appointee, Todd Blanche.
The Blockchain Regulatory Certainty Act language has stayed unchanged, preserving protections for non-custodial software developers and blockchain infrastructure providers while keeping self-custody rights intact.
Furthermore, the negotiated stablecoin rewards compromise has been maintained, but new law enforcement measures have been added, including funding for blockchain investigations, training programs, a cyber center targeting nation-state threats, and procedures allowing compliant stablecoin issuers to freeze or reissue tokens when legally required.
A Bill Still Short on Votes
The political divide is not new for the CLARITY Act. The House passed its own version 294-134 back in July 2025, and the Senate Banking Committee advanced this chamber’s draft in May with two Democrats crossing over.
Getting 60 votes on the floor is a different fight, and prediction markets have priced that in. As CryptoPotato reported, odds of passage this year sat above 70% right after the Banking Committee vote and had slipped to around 31% by this week.
Meanwhile, former CFTC Chairman Chris Giancarlo believes there is a greater than 50% chance the CLARITY Act ultimately fails, although he argued that the SEC and CFTC have already established regulatory frameworks that would continue supporting innovation even without the bill.
The post Democrats Reject Latest CLARITY Act Draft Over Ethics, Illicit Finance Concerns appeared first on CryptoPotato.