Senate's CLARITY Act Hits Ethics and Crime-Fighting Speed Bumps Before August Recess 🏛️

The CLARITY Act's path to a U.S. Senate floor vote narrowed this week as two unresolved disputes — over ethics provisions targeting President Donald Trump's crypto business interests and over law enforcement concerns regarding developer protections — threatened to delay the digital asset market structure bill.

A closed-door bipartisan meeting on Tuesday, June 9, saw Republicans and the White House walk back a provision that would have allowed state attorneys general to sue the Department of Justice (DOJ) for failing to enforce ethics rules. The collapsed framework had been negotiated by Senators Kirsten Gillibrand, Ruben Gallego, Bernie Moreno, and Cynthia Lummis, with White House Crypto Council Executive Director Patrick Witt in attendance. A Democratic source described the ethics negotiations as "rocky," citing what they characterized as an "about-face" by GOP members and the White House on an agreement they say had previously been reached. Republicans offered to limit enforcement authority to the Attorney General and floated impeachment as a remedy, according to Crypto In America, but Democrats rejected both ideas.

The ethics dispute centers on Trump's family crypto ventures, including DeFi project World Liberty Financial (WLFI), stablecoin USD1, and Bitcoin mining, which have generated an estimated $2.3 billion. Trump media reported his crypto profit topped $3 billion in the past year, while retail investors holding his tokens lost $4 billion. The Senate has 31 session days remaining before the August recess, and the bill requires 60 votes, forcing Republicans to court Democratic support. Senators Gallego and Angela Alsobrooks have indicated their backing depends on strong ethics guardrails. The group is expected to reconvene Thursday in another attempt to break the impasse.

On Wednesday, June 10, the White House hosted a separate meeting at the Eisenhower Executive Office Building, bringing together roughly 20 participants, including House Majority Whip Tom Emmer, White House AI and crypto czar David Sacks, and representatives from the Fraternal Order of Police, the National Sheriffs' Association, the National District Attorneys' Association, the National Association of Police Organizations, the International Association of Chiefs of Police, and the National Association of Assistant U.S. Attorneys. Officials from the DOJ, Treasury, and FinCEN also attended. According to journalist Eleanor Terrett, the session focused on Section 604 of the bill, the Blockchain Regulatory Certainty Act (BRCA), which seeks legal relief for developers of non-custodial platforms by avoiding classification as money transmitters. Some law enforcement officials warn the provision could complicate enforcement against bad actors operating onchain, though over 160 law enforcement officials recently backed the bill. Senators Mark Warner and Catherine Cortez Masto have tied their support to law enforcement's sign-off.

Earlier in the week, more than 200 crypto organizations, including Stand With Crypto, the Blockchain Association, the Crypto Council for Innovation, and The Digital Chamber, sent a joint letter dated June 7 to Senate leaders John Thune and Chuck Schumer urging a floor vote. "The Senate should now build on that momentum and give members the opportunity to advance durable market structure legislation," the letter stated, adding, "The question before Congress is whether that future will be built in the United States — under U.S. law, U.S. oversight, and American values — or continue moving to offshore jurisdictions." A separate group of more than 60 firms, including Hyperliquid, Solana, MultiCoin Capital, and the DeFi Education Fund, pressed the Senate to safeguard developers' rights. Tushar Jain, co-founder of MultiCoin Capital, said, "Defending developers is defending America's edge in the technologies that matter most."

Lummis wrote on social media, "The CLARITY Act passed committee. The floor is next." White House crypto chief advisor Patrick Witt posted, "Big week ahead for Clarity. The work has continued in earnest behind the scenes since the Banking markup. The issue set has narrowed, and good faith offers are being put forward to close the gap. But time is of the essence." JPMorgan CEO Jamie Dimon said last month that banks would "fight" parts of the legislation on stablecoin regulation, arguing that crypto firms offering payment and deposit-like services should face banking-style oversight. Prediction markets reflect the strain: Polymarket traders priced the bill's 2026 passage odds near 48%, down from 74% a month ago.