GOP crypto bill loopholes shield Trump family token profits
A Republican draft of the Clarity Act introduces digital asset ethics rules, but structural loopholes and unified Democratic opposition threaten to stall broader crypto regulation before the August recess.
Republican lawmakers released a 600-page draft of the Clarity Act on Wednesday, introducing new ethics rules for public officials involved in digital assets. The legislation would bar officials, their spouses, and employees from issuing or sponsoring cryptocurrencies. However, the bill faces immediate political headwinds that make its passage unlikely before Congress breaks for its August recess.
For market participants, the proposed rules contain significant carve-outs that would allow President Donald Trump’s existing crypto ventures to continue generating revenue. While the bill bans the use of a public official’s likeness for new digital assets, it explicitly permits issuers to keep using that likeness if the token launched before the official took office. Because Trump issued his $TRUMP memecoin just three days before his inauguration, the coin remains unaffected by the restrictions.
The legislation also fails to restrict family members of public officials from sponsoring digital assets, leaving Trump’s roughly 40% stake in World Liberty Financial insulated. Forbes estimated Trump netted an estimated $1.4 billion last year from his crypto dealings, comprising roughly $635 million from $TRUMP and $800 million through World Liberty Financial, which earned him about $57.4 million the prior year.
Beyond the structural loopholes, the bill tasks the attorney general with enforcing the ethics provisions while explicitly barring state attorneys general from doing so. Congressional Democrats have signaled they will not support delegating enforcement authority to the current Justice Department. Sen. Angela Alsobrooks, D-Md., called the enforcement mechanism “wild and unserious and stone crazy,” adding, “it’s an absolute that we cannot completely rely on the DOJ, given what we’ve seen of their inability and their unwillingness to enforce the law.”
The Democratic backlash presents a mathematical hurdle for the legislation. The Senate requires 60 votes to advance the bill, but no Democrats have endorsed the current text. Sen. Elizabeth Warren, D-Mass., stated the draft “does nothing” to prevent Trump from profiting and is “riddled with major loopholes” that effectively preserve his World Liberty Financial revenue stream. Alsobrooks joined six other Senate Democrats in a statement declaring the draft “falls short,” specifically criticizing the ethics language.
The ethics provision is also scheduled to sunset on Jan. 20, 2029, coinciding with the inauguration of the next president. Sen. Cynthia Lummis, R-Wyo., defended the temporary nature of the rules, arguing “this is a standard President Trump chose to hold himself to, not one Congress imposed on him.” Lummis insisted “no president in American history has voluntarily agreed to self-imposed, substantive ethics limits like President Trump has.”
The White House aligned with Lummis, calling the provision “the most comprehensive and wide-ranging ethics provision in history.” Despite this executive backing, the stark partisan divide over enforcement and the bill's specific exemptions suggest the broader push to establish a comprehensive US regulatory framework for digital assets will remain deadlocked.
