2 weeks left for Clarity: State of Crypto

New draft legislation called the Digital Asset Market Clarity Act, or Clarity Act, has been released by Senators and merges previous versions from Senate committees responsible for banking and agriculture. This draft also includes an ethics provision that aims to prevent senior government officials from launching or sponsoring their own cryptocurrencies, a response particularly directed at former President Donald Trump. Although the updated text marks progress, the bill is not yet finalized with bipartisan agreement, and the timeline for passing it is becoming very tight as the Senate approaches its August recess.

The main point of contention remains the ethics provision. Democrats want a stricter version that would impact Trump, especially addressing the $1.4 billion he reportedly earned from crypto last year. The current ethics clause, supported by the White House but not Senate Democrats, would require Trump to divest or place his crypto-related businesses into a blind trust within a year and entrust enforcement to the Department of Justice. Democratic lawmakers doubt that the DOJ would pursue enforcement while Trump remains in office. They also criticize the provision for expiring with the next presidential inauguration and for allowing Trump to continue profitably benefiting from existing tokens featuring his likeness.

Supporters of the ethics provision, including Senator Cynthia Lummis and White House adviser Patrick Witt, argue that it covers a wide range of officials and federal judges and represents the most comprehensive ethics rule ever agreed to by a U.S. president. Despite this, the politics of the 2026 election year loom large, making the issue a significant point of contention especially for Democrats who see it as a campaign issue. Additionally, some Republicans have expressed concerns with the legislation, revealing that opposition is not strictly partisan.

Industry participants largely favor passing the bill as it provides needed regulatory clarity and investor protections that currently do not exist. The timeline for formal Senate action includes a motion to proceed expected early in the week following the article’s publication, possibly allowing a vote before the August 7 recess. Passage, however, will depend heavily on reaching agreement on the ethics provision by July 30. Other legislative priorities such as key nominations and sanctions bills add pressure on the Senate’s schedule, making the fate of the Clarity Act uncertain but closely watched.