Senate Clarity Act Draft Targets Official Crypto Issuance

Senate Republicans released a sweeping 616-page draft of the Clarity Act on Wednesday. The updated legislation pairs long-sought industry protections with a first-of-its-kind ethics ban on public officials issuing cryptocurrency.

The new ethics section directly addresses the conflict-of-interest debate surrounding President Donald Trump’s crypto ventures. A July financial disclosure linked those ventures to roughly $1.4 billion in 2025 income. Under the text, the president, vice president, members of Congress, federal judges, and their spouses are barred from issuing or sponsoring digital assets for financial gain.

This ban carries an expiration date of noon on January 20, 2029, coinciding with the conclusion of the current presidential term. Officials can avoid violations by placing assets in a qualified blind trust or divesting. A carve-out also protects tokens that simply used an official's likeness before they entered government service.

For crypto markets and institutional investors, the draft preserves core operational safeguards that firms have heavily lobbied to maintain. Non-custodial developers and infrastructure providers remain exempt from money transmitter rules. It establishes explicit bankruptcy protections by defining customer digital assets as the property of the account holder, insulating them from a failed firm's estate.

That bankruptcy provision is specifically designed to prevent another FTX-style collapse. Furthermore, the Keep Your Coins Act provision explicitly protects the right to self-custody. The bill also maintains criminal liability for anyone who "knowingly" facilitates illicit transactions.

Stablecoin issuers face a more constrained operating environment under a bipartisan compromise. Issuers cannot pay interest on idle payment-stablecoin balances, though they may offer rewards linked to active network participation like staking or transactions. Stablecoin issuers must additionally obey lawful government directives to seize, freeze, burn, or reissue tokens.

Law enforcement capabilities are significantly bolstered in the new text. The bill increases funding for state and local blockchain analytics and police training. It also creates a new cyber center targeting nation-state actors like North Korea and Iran, alongside a public-private task force on fraud.

The legislation currently lacks Democratic support, despite negotiations between the White House and Republican Senators Cynthia Lummis and Bernie Moreno. Democrats had previously pressed for enforceable conflict-of-interest rules during a May committee markup. The Senate Banking Committee advanced its text in a 15-9 vote in May.

Lummis voiced a commitment to "reaching a deal in the coming days that will allow this legislation to become law," while Majority Leader John Thune plans a floor vote in the coming weeks. The push follows House passage in July by a 294-134 vote. Coinbase and other industry players are demanding Senate action before the August recess, a timeline Treasury Secretary Scott Bessent recently described as being at the "1-yard line."