The White House's crypto adviser, Patrick Witt, said Republicans have granted as much as 95% of requests from Democratic negotiators in the Digital Asset Market Clarity Act and he said any Senate opposition to it must be political at this stage.
In a Monday appearance in Washington, Witt said President Donald Trump deserved a "big thank you" for his new willingness to further compromise on a Clarity Act government ethics provisions.
"These are historic and unprecedented provisions," Witt said at a Solana Policy Institute summit. "I wouldn't want to be a Democrat that votes against these."
He said he feels "very good" about the coming Senate vote on what he said was the product of a massive, bipartisan effort, but he said that whether it gets enough yes votes could be "a political calculation and not a policy calculation."
On Sunday night, Senate Republicans circulated another draft of the Clarity Act, this time making some further concessions to Democrats on the key government-ethics section and other points, such as criminal prosecution of decentralized finance (DeFi) projects. However, the compromise wasn't one crafted alongside Democrats, and initial signals show some resistance there. The bill will need a large number of Democrats to vote yes if it's going to beat the Senate's 60-vote threshold.
Democratic staff on the Senate Banking Committee noted Monday that the new version leaves Trump's own appointees — especially the attorney general — too much authority to shut down enforcement of the ethics section, and they said the power given to states to target the attorney general with legal action instead of individual violators is insufficient.
The industry and its supporters spent Monday cheering on the Clarity Act process, which faces a major test on Tuesday with a plan for casting the first of several votes to begin advancing the bill on the Senate floor. The first vote is widely seen as the bellwether that will signal the chance that the long-awaited legislation — currently more than 600 pages — heads toward passage.
But there are plenty of headwinds to this process. So far, a large number of state attorneys general have also said they don't support the legislation's treatment of their legal powers to pursue bad actors. And on the flip side, the crypto industry is uneasy about the new language's treatment of DeFi.
And despite some new ideas for protecting bank deposit accounts from stablecoin competition, the banking sector's opening response was also negative, with a coalition of the banking trade associations sharing "critical concerns raised by banks of all sizes regarding the risk of deposit flight and diminished credit and lending associated with permitting yield on payment stablecoins."
"The way the current legislative text is drafted provides loopholes and avenues for the prohibition to be easily evaded that would still allow interest and interest-like payments to be made on stablecoin balances," the groups said in a letter to Senate leaders.
Witt called their worries over potential deposit flight due to stablecoin rewards programs an "entirely hypothetical and speculative concern."
"What more do you want?" Witt said, noting the lengthy bipartisan talks that took input from both parties and the affected industries. "If you oppose the Clarity Act because you just hate crypto, that's fine. Just say that."
Even if more than 60 senators vote yes to advance the bill, which is the threshold needed to meet the chamber's requirements for what's known as "cloture," the first vote is not the end of the process. A period of potential amendments then begins, and other votes must take place. If the Senate still gives its approval in the end, the bill then heads back to the House of Representatives.
The complication there: The House isn't in session and may not be until after the November midterm elections. So it may be that post-election "lame duck" session in which the bill would see final action.
"We can't afford to lose another year," said Representative Tom Emmer, a pro-crypto lawmaker who is majority whip in the House. Whether or not everybody loves the contents, Emmer argued, "we've gotta get this thing done."
The end game for the Clarity Act has revolved around the ethics section that would impose restrictions on crypto ties for many federal officials, including President Trump. Democrats have said the bill must address what they characterize as corruption in the Trump administration — most notably the president's own personal business interests in crypto.
The president had made an initial concession on this point, but Democrats said it wasn't strong enough. Then Witt said that officials sat down with Trump on Friday to talk about the provision, and he accepted further limits that could force him to push his investments into blind trusts and would allow states some powers to pursue federal government ethics violations.
Witt called the current language the "strongest provision that would exist in federal ethics law." He said Trump was advised that the ethics section couldn't be "weaponized" against him.
However, the authority of state attorneys general wouldn't allow them to pursue ethics violations directly with the federal officials under the section's umbrella, which beyond the president includes the vice president, members of Congress and federal judges. But Witt said they'd have unprecedented powers to go after crypto exchanges that list improper assets and the U.S. attorney general.
"This bill is worth supporting; It's a bipartisan bill," Witt said. "We're trying to rectify a mistake that was made, which was trying to kill this industry."
He said that a failed Clarity Act won't end U.S. regulatory efforts. Witt said the Commodity Futures Trading Commission and Securities and Exchange commission stand ready with a "robust" rulemaking agendas.
"They've got a job to do one way or the other," he said. "There's still good news coming for the industry."
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