Ethics Clause Drops With a Sunset Clause: CLARITY Act's 2029 Self-Destruct Button 🔥

Senate Republicans released a 616-page draft of the Digital Asset Market Clarity (CLARITY) Act this week, formalizing an ethics provision that bars the president, vice president, members of Congress, federal judges, and their spouses from issuing or sponsoring digital assets, and that requires those officials to divest crypto holdings or place them in a blind trust, with the section set to expire at noon on January 20, 2029. The ethics language was described by the White House as "the most comprehensive and wide-ranging ethics provision in history," and Senator Cynthia Lummis, a Wyoming Republican and lead negotiator, said the bill "applies one ethics standard to everyone, including the President of the United States, and backs it up with real enforcement, real penalties, and a Department of Justice mandate to act." Enforcement of the conflict-of-interest restrictions is assigned to the U.S. Attorney General rather than to state attorneys general, the latter being the preference Democrats had carried into negotiations.

The enforcement jurisdiction is the central remaining flashpoint, with Senate Democrats signaling that the DOJ-only model is insufficient. "I wouldn't support the bill if that's the language," Senator Angela Alsobrooks said in a Tuesday statement to Politico. Senator Ruben Gallego was more blunt on Thursday, telling Politico, "Whatever piece of s--- they sent back to us, that was not a serious effort. After all the work that we've done with our Republican colleagues, that they would take the months and months of work and somehow interpret that and turn around and think what they offered was even remotely close." Progressive groups including Indivisible and Demand Progress sent a letter to every Democratic Senate office flagging Senator Kirsten Gillibrand's crypto ties and her son's new crypto venture as they criticized her role in compromise talks; Gillibrand chairs the Democratic Senatorial Campaign Committee. The draft does not extend the ban to children of officials, a notable carve-out given that Donald Trump Jr. and Eric Trump are co-founders of World Liberty Financial, and Eric Trump and Donald Trump Jr. launched American Bitcoin, a Bitcoin ($BTC) mining company. Crypto journalist Eleanor Terrett reported on X that "Bipartisan discussions are taking place on Capitol Hill today relating to ethics, I'm told," and noted that "Negotiators are also discussing DeFi provisions, but ethics remains the primary hurdle."

Financial disclosures released last month showed Trump earned more than $1.2 billion from crypto businesses in 2025; a separate figure of $1.4 billion was also cited in reporting on his 2025 crypto income. Senator Elizabeth Warren has demanded the bill bar the president, vice president, senior officials, members of Congress and their families from profiting off the sector. The Senate is expected to need at least 10 Democrats to approve the final bill under the chamber's 60-vote threshold, with Republicans holding 52 seats in one source's count and 53 in another. As of Wednesday, Trump's former personal attorney and acting Attorney General Todd Blanche was awaiting a Senate confirmation vote to head the Justice Department.

Senate Majority Leader John Thune has indicated he intends to bring the bill to the floor in the coming days before the chamber's state work period, which runs from Aug. 7 to Sept. 14, though he told reporters last week that a final vote before the August recess is unlikely. "Even if CLARITY were brought up today, the procedural steps — cloture → amendment process → second cloture → up to 30 hours of debate — make finishing before recess extremely difficult without [unanimous consent] agreement to waive process, which is rare on contested bills," said Anne Kelley, a partner at Mercury Strategies, in a Monday X post. Polymarket traders priced 2026 passage at roughly 33% to 37% as of late July, down from above 80% in February.

Beyond the ethics fight, the latest draft preserves the Blockchain Regulatory Certainty Act, a safe harbor clarifying that non-custodial software developers are not "money transmitters," and adds illicit-finance language Lummis has tied to North Korea's Lazarus Group. "North Korea's Lazarus Group and other bad actors thrive on gaps in our financial rules. The Clarity Act gives Treasury new sanctions authority and a safe harbor for companies to freeze suspicious transactions before the money moves," Lummis posted on X on July 26. Section 201 extends Bank Secrecy Act and anti-money-laundering obligations to crypto firms, Section 303 adds Treasury sanctions authority aimed at Iran, and Section 305 lets exchanges freeze funds tied to suspicious activity when cooperating with law enforcement. The National Association of Assistant U.S. Attorneys and the National District Attorneys Association sent a letter to the White House asking that the developer provisions not "create, expand, or modify criminal liability under Federal law," a request White House crypto adviser Patrick Witt said was "not even close" to the administration's position. The Crypto Council for Innovation, Digital Chamber, and Blockchain Association wrote to Thune and Minority Leader Chuck Schumer on Friday urging "floor consideration" of the bill, and Coinbase CEO Brian Armstrong posted on X that "This bill fixes that with strong consumer protections, real tools for law enforcement, and a path for America to lead in this industry."