Crypto Clarity Act still at mercy of ethics section as Democrats balk at Trump deal

The U.S. Senate is continuing to negotiate the crypto Clarity Act, with a central sticking point being the enforcement of crypto-related ethics restrictions on government officials, including President Donald Trump, the vice president, and members of Congress. Although Trump has reportedly agreed to impose comprehensive limits on government officials' crypto involvement, Democrats remain unsatisfied with how these restrictions would be enforced. The key disagreement lies in whether state attorneys general or the U.S. attorney general should have authority to enforce these provisions.

A White House official briefed the crypto industry, indicating that Democrats prefer enforcement by state attorneys general, many of whom have previously opposed the Trump administration, while the White House and Republican bill supporters insist on federal enforcement by the Department of Justice. This dispute over jurisdiction has become the main hurdle in advancing the bill. Negotiators hope to resolve this issue soon, aiming to meet a significant deadline of August 7, before the Senate's summer recess.

Trump’s acceptance of these crypto ethics restrictions is notable given his and his family's deep business ties to crypto enterprises such as World Liberty Financial, raising questions about how conflicts of interest will be sufficiently mitigated. Democrats have accused Trump of corruption related to his crypto holdings, while the administration argues it has made strong efforts to address Democratic concerns and suggests responsibility lies with Democrats if the bill does not advance.

Even if a compromise is reached and the Senate passes the bill, it must still be approved by the House of Representatives, which faces internal divisions within the Republican majority that could delay progress. There is also concern among Democrats that the bill could be complicated by the inclusion of prediction-market policy, a contentious issue that might derail the legislation. Thus, while there is movement toward agreement, significant political and procedural obstacles remain before the crypto Clarity Act can become law.