Clarity Act stalls before recess as Democrats reject ethics text
The Senate's crypto market-structure bill faces a 50-50 passage probability after Democrats rejected a Republican ethics provision, threatening to delay landmark industry regulation beyond the August recess.
The Clarity Act's path through the Senate has hit a wall. Majority Leader John Thune said Thursday the crypto market-structure bill is unlikely to pass before the August recess following a blunt rejection of the latest draft's ethics provision by Democrats. Galaxy Research immediately cut the bill's passage odds to 50-50.
At issue is enforcement authority. Democrats refuse to accept a framework that relies solely on the Department of Justice, a position driven by a lack of trust in the Trump administration to police its own president. Earlier negotiations had already fractured over the role state attorneys general would play in supervising the market.
Senator Ruben Gallego dismissed the Republican language outright. “Whatever piece of s–t they sent back to us, that was not a serious effort,” he said, faulting the GOP for undermining months of talks. Gallego is now drafting a counteroffer with Senator Thom Tillis and other unnamed Republicans. “We are still in this fight,” he said. “We are going to send back language.”
Republican Senators Cynthia Lummis and Bernie Moreno crafted the disputed text alongside the White House, which is pressuring Democrats to accept it. Lummis defended the provision, stating that “President Trump is supporting the most robust ethics rules ever imposed on the office of the presidency.” Under the draft, federal officials would be barred from issuing digital assets and the rules would sunset in 2029.
The ethics debate stems directly from the president's crypto ventures, which a July disclosure linked to over $1 billion in income. A group of seven Democrats led by Senator Angela Alsobrooks warned the text “falls short” on consumer protection, illicit finance, and conflicts of interest. Tillis called the White House-approved language “good,” but conceded that “the baseline… falls short of what some of the Democrats want.”
Beyond ethics, the treatment of stablecoin yield remains a point of contention among Republicans. The legislative uncertainty has also split Wall Street, with Goldman Sachs backing the measure while JPMorgan opposes it.
Industry negotiators had targeted August 7 for the bill to clear the Senate to ensure passage this year. Thune dampened those expectations, telling reporters, “I don’t think we’ll be able to get them done,” though he added, “I would like to at least get Clarity started. We’ll see where the votes are.” His staff indicated a Russia sanctions bill championed by the late Senator Lindsey Graham is next in line for floor time.
White House crypto adviser Patrick Witt pushed back on Thune’s timeline, telling CoinDesk he was “perplexed” and “slightly more optimistic” because the first week of August remains open. If the chamber fails to act before the recess, a September vote would face a narrow window crowded by midterm campaigning. The House passed its version of the bill in July 2025.
