Ethics Ban Hits Washington — But Only Until 2029, So Pack a Watch ⏳

Bipartisan negotiators on the Digital Asset Market Clarity Act, H.R. 3633, circulated a 616-page draft on Wednesday that bans the president, vice president, federal judges, members of Congress and their spouses from issuing or sponsoring digital assets while in office, and bars crypto platforms from listing any asset issued or sponsored by a covered official. The ethics section requires those officials to divest their crypto holdings or place them in a blind trust, or both, and assigns enforcement to the U.S. Attorney General rather than to state attorneys general. The provision carries a sunset clause stating it will have "no force and effect on and after noon on January 20, 2029," the scheduled end of President Donald Trump's current term, and does not extend to the children of public officials, including Trump's sons Don Jr. and Eric Trump, who are co-founders of World Liberty Financial and two of whom launched American Bitcoin. Senator Cynthia Lummis, a Wyoming Republican and lead negotiator, said on X that "This 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. This is not talk." A White House spokesperson told reporters last week's White House meeting "went well," and said "the ethics text set to release in the coming days will reflect that productive conversation."

Democrats have signaled the package does not yet meet their threshold. Senator Ruben Gallego, a Democrat, told 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." Senator Angela Alsobrooks, a Democrat, said earlier in the week, "I wouldn't support the bill if that's the language. But we'll keep working from that floor to reach an agreement that holds us all accountable." According to a Thursday PunchBowl report, Senator Thom Tillis and Gallego submitted a counteroffer to the White House that would allow state authorities, not the U.S. Attorney General, to enforce the ban on federal officials issuing or sponsoring tokens. Progressive groups including Indivisible and Demand Progress sent a letter to every Democratic Senate office criticizing Senator Kirsten Gillibrand's role in the ethics talks and raising concerns over her son's crypto venture, according to Axios. Republican lawmakers hold 52 seats with Senator Mitch McConnell absent for medical reasons, and the bill needs 60 votes to clear the Senate, meaning at least 10 Democrats must support it.

The draft also folds in illicit-finance provisions Lummis has framed as the centerpiece of the national-security case for the bill. Section 201 extends Bank Secrecy Act and anti-money-laundering obligations to crypto firms, including exchanges, DeFi front ends and crypto ATMs. Section 303 adds new Treasury sanctions authority aimed at Iran. Section 305 creates a safe harbor allowing exchanges to freeze funds tied to suspicious activity before obtaining a court order, provided they cooperate with law enforcement. Lummis wrote on X that "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." Treasury estimates Lazarus has stolen at least $3.4 billion in crypto since 2007, including roughly $625 million from the Ronin Bridge in 2022 and a record $1.5 billion from Bybit in February 2025. The bill preserves the Blockchain Regulatory Certainty Act, which clarifies that non-custodial software developers are not "money transmitters" required to register as such; the National Association of Assistant U.S. Attorneys and the National District Attorneys Association asked the White House to revise that portion so it does not "create, expand, or modify criminal liability under Federal law," prompting White House crypto adviser Patrick Witt to say the proposed changes were "not even close" to the Trump administration's position and implied they were not the result of "productive negotiations."

The bill would shift primary oversight of digital assets from the U.S. Securities and Exchange Commission to the Commodity Futures Trading Commission, both of which currently operate understaffed at the leadership level, with one CFTC chair and three SEC commissioners in place. Digital Chamber CEO Cody Carbone said, "Today's draft is a meaningful step toward the Senate vote on the Clarity Act we've been calling for... We look forward to reviewing the latest, and we will provide our members' feedback on how the bill may still be improved as it moves forward." Coinbase CEO Brian Armstrong wrote on X, "There's no federal framework, so bad actors like FTX can harm US customers and much of the industry has gone offshore totally outside US purview. This bill fixes that with strong consumer protections, real tools for law enforcement, and a path for America to lead in this industry." The Crypto Council for Innovation, Digital Chamber and Blockchain Association sent a Friday letter to Senate Majority Leader John Thune and Minority Leader Chuck Schumer calling for "floor consideration" of the bill and urging bipartisan talks to continue. Cryptocurrency advocacy groups are pressuring the chamber to act before the Senate's state work period begins August 7, which would run through September 14 and push the bill into the post-recess window ahead of the November midterm elections.

Senate Majority Leader John Thune told reporters he intends to move forward with floor action in the coming days before the recess, though he does not expect a final vote before August 7. Polymarket traders have priced 2026 passage of the CLARITY Act at roughly 33% to 37%, down from above 80% in February. Bitcoin ($BTC) traded at $65,204.28, up 0.96% over 24 hours, while industry data showed $BTC reclaiming $66,000 on a +3.5% daily move with $31.5 billion in trading volume as the talks progressed.