Senate's CLARITY Act hits ethics pothole, developer speedbump, and a $30T daydream 🚧

The CLARITY Act, one of the most closely watched digital asset market structure bills in Congress, is heading into a critical stretch of negotiations after bipartisan ethics talks collapsed and law enforcement groups raised fresh concerns about provisions governing non-custodial blockchain developers. In a closed-door Senate meeting on Tuesday, Republicans and the White House walked back a deal that would have allowed state attorneys general to sue the Department of Justice for failing to enforce ethics rules targeting President Donald Trump's crypto ventures, prompting Democrats to reject alternative proposals that would have limited enforcement to the Attorney General or relied on impeachment. Senators Kirsten Gillibrand, Ruben Gallego, Bernie Moreno, and Cynthia Lummis attended the session alongside White House Crypto Council Executive Director Patrick Witt, with Gallego and Senator Angela Alsobrooks (D-MD) indicating their continued support depends on strong ethics guardrails addressing Trump's family crypto interests, which an earlier report estimated have generated $2.3 billion. The ethics breakdown is one of three major sticking points, alongside the Senate Agriculture Committee's text and Section 604 of the bill, known as the Blockchain Regulatory Certainty Act (BRCA), which has drawn scrutiny from law enforcement groups worried that developer protections could complicate efforts to pursue onchain crime. On Wednesday, the White House Crypto Council hosted roughly 20 participants at the Eisenhower Executive Office Building, including representatives from the Fraternal Order of Police, the National Association of Police Organizations, the International Association of Chiefs of Police, the National District Attorneys Association, the National Association of Assistant U.S. Attorneys, the National Sheriffs' Association, House Majority Whip Tom Emmer, White House AI and crypto czar David Sacks, and officials from the DOJ, Treasury, and FinCEN. Senators Mark Warner and Catherine Cortez Masto have tied their support to law enforcement sign-off on the section, while JPMorgan CEO Jamie Dimon said last month that banks would "fight" parts of the legislation's stablecoin provisions and argued that crypto firms offering payment and deposit-like services should face banking-style oversight requirements.

The industry response has been forceful and coordinated, with more than 200 crypto organizations and companies signing a June 7 joint letter from Stand With Crypto, the Blockchain Association, the Crypto Council for Innovation, and The Digital Chamber calling on Senate leaders John Thune and Chuck Schumer 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, adding that "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." On June 9, a separate group of more than 60 firms including Hyperliquid, Solana, MultiCoin Capital, and the DeFi Education Fund pressed the Senate to safeguard developer rights, with MultiCoin co-founder Tushar Jain saying, "Defending developers is defending America's edge in the technologies that matter most." Senator Lummis, one of Congress' most prominent crypto advocates, wrote on X that "The Clarity Act delivers $150 million for law enforcement to track down scammers and bad actors in the digital asset space," and separately posted, "The CLARITY Act passed committee. The floor is next." Solana Institute President Kristin Smith argued that "the BRCA draws a bright line: if you write open-source software, run a node, or validate transactions — and never take custody or control of anyone's money — you are not a money transmitter."

White House officials have publicly maintained optimism even as timelines slip. Patrick Witt told journalist Eleanor Terrett that "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." In a separate interview he said, "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… Groups are at the table, trading paper. So, I'm still optimistic that we could hit that timeline." Senator Bill Hagerty told FOX Business that "This will be something more a matter of focus after the 4th of July recess period, but I certainly hope to see it done before." Senate Banking Committee Chairman Tim Scott said "The fact of the matter is that even JP Morgan is now getting involved in stable coins" and argued that "digital assets is a part of the future of finance," predicting the crypto market could grow from $3 trillion to $30 trillion. Arca's David Nage wrote that "on the actual policy of crypto market structure, we are very close. Call it 80–85% finished," though he added that ethics remains the decisive issue. Senate Agriculture Committee Chairman John Boozman said after a Thursday meeting, "I believe the effort is coming together," while cautioning, "One of the issues that we have is, a lot of members don't understand it. In fact, I would say most members don't."

Prediction markets reflect the uncertainty. Polymarket traders priced the bill's 2026 passage odds near 48%, down from 74% a month ago, and later around 51% in one reading, while Kalshi showed 46% for year-end passage and 30% odds of passage before August. The House officially unveiled crypto tax proposals addressing double taxation on miners and stakers, drawing a reaction from Witt: "Clarity for market structure, Parity for tax. Great work." The Senate has 31 session days left before the August recess, the bill needs 60 votes, and the legislation still requires merging the Banking and Agriculture Committee texts before any floor action can proceed.