CLARITY Act stuck in legislative limbo as ethics, developer, and crime-fighters all want a word

The CLARITY Act, one of the most closely watched digital asset market structure proposals in Congress, faces multiple unresolved issues as it moves toward a potential U.S. Senate floor vote, with 31 session days remaining before the August recess and 60 votes needed for passage. More than 200 crypto organizations and companies, including Stand With Crypto, the Blockchain Association, the Crypto Council for Innovation, and The Digital Chamber, urged Senate leaders John Thune and Chuck Schumer in a joint letter dated June 7 to schedule the bill for full Senate consideration. "The Senate should now build on that momentum and give members the opportunity to advance durable market structure legislation," the letter stated. Senator Cynthia Lummis wrote in a recent post, "The CLARITY Act passed committee. The floor is next." The legislation has already advanced out of the Senate Banking Committee with bipartisan support, and the letter framed the bill as a competitiveness issue, warning that without clearer federal rules the digital asset industry risks moving further toward offshore jurisdictions. "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," the letter said.

Three sticking points have emerged. On Tuesday, a closed-door bipartisan meeting attended by Senators Kirsten Gillibrand, Ruben Gallego, Bernie Moreno, and Cynthia Lummis, along with White House Crypto Council Executive Director Patrick Witt, saw Republicans and the White House walk back a provision that would have allowed state attorneys general to sue the Department of Justice for failing to enforce ethics rules tied to President Donald Trump. Republicans offered to limit enforcement authority to the Attorney General and floated impeachment as a remedy, which Democrats rejected. 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 a previously reached agreement. Senators Gallego and Angela Alsobrooks have indicated their continued support depends on strong ethics guardrails addressing Trump's crypto business interests; reporting has tied Trump's family to an estimated $2.3 billion in crypto earnings, with one outlet citing crypto profit above $3 billion over the past year and retail investors in his tokens losing $4 billion. The CLARITY Act's ethics provisions are also aimed at preventing other administration members from holding business interests in the sector, a concern amplified by Trump's family's involvement in World Liberty Financial (WLFI), the USD1 stablecoin, Bitcoin mining, and other crypto verticals.

On Wednesday, the White House Crypto Council hosted law enforcement officials at the Eisenhower Executive Office Building to discuss Section 604 of the bill, the Blockchain Regulatory Certainty Act, which seeks legal relief for developers of non-custodial platforms. About 20 people attended, including House Majority Whip Tom Emmer and White House AI and crypto czar David Sacks, who delivered opening remarks before departing. Law enforcement participants included representatives from the Fraternal Order of Police, the National Association of Police Organizations, the International Association of Chiefs of Police, the National Sheriffs' Association, the National District Attorneys Association, and the National Association of Assistant U.S. Attorneys, along with officials from the DOJ, Treasury, and FinCEN. "Much of it focused on the Blockchain Regulatory Certainty Act (BRCA)," journalist Eleanor Terrett reported, with participants also discussing "potential solutions to strengthen" enforcement and examining whether some provisions "could make it harder to combat illicit finance." Senators Mark Warner and Catherine Cortez Masto have tied their support to law enforcement sign-off, and over 160 law enforcement officials have backed the bill. Separately, more than 60 firms, including Hyperliquid, Solana, MultiCoin Capital, and the DeFi Education Fund, pressed the Senate on June 9 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."

White House chief crypto advisor Patrick Witt said in a recent interview, "We're still making great progress across three areas that the Democratic Senators had raised as the ones they wanted to see progress on. Every day, we're doing trifecta. Mornings or afternoons on Ag, ethics, and BRCA," referring to the Senate Agriculture Committee's version of the bill that determines the CFTC mandate, the ethics provisions, and the Blockchain Regulatory Certainty Act. Witt added, "We're making progress on all fronts, every day. Groups are at the table, trading paper. So, I'm still optimistic that we could hit that timeline," pointing to a self-imposed July 4 target. He separately wrote, "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." The House has also unveiled crypto tax proposals addressing double taxation on miners and stakers, which Witt characterized as "Clarity for market structure, Parity for tax."

Traditional financial institutions have signaled opposition to parts of the bill. JPMorgan CEO Jamie Dimon said last month that banks would "fight" stablecoin-related provisions, arguing that crypto firms offering payment and deposit-like services should face banking-style oversight requirements, including equivalent liquidity, AML, capital, and consumer protection obligations. Prediction markets reflect the strain: Polymarket traders price the bill's 2026 passage odds near 48%, down from 74% a month ago, while Kalshi prices a 46% chance of passage by year-end and a 30% chance of passage before August. JPMorgan analysts have also cited stablecoin yield as a potential obstacle. The group is expected to reconvene Thursday in another attempt to break the impasse on the ethics framework.