Quick Take
- Democrats are pushing back over the latest Clarity Act draft‘s ethics provisions, calling them too weak to address President Trump’s crypto interests and warning they wont support the legislation without stronger guardrails.
- The crypto industry praised the bill for providing regulatory clarity, while major banks opposed it, arguing it doesnt do enough to protect deposits from competition by stablecoin rewards.
Senate Republicans on Wednesday released a 616-page version of the so-called Clarity Act cryptocurrency regulation bill, the first major legislative effort to oversee the digital asset industry. While crypto advocates welcomed the measure, Democrats quickly signaled opposition over what they called weak ethics provisions tied to President Trump‘s crypto holdings, raising doubts about the bill’s path forward in the Senate.
The legislation, which combines earlier versions passed by the Senate Banking and Agriculture committees, drew strong support from the crypto industry. Advocates praised the retention of software developer protections and said the bill would deliver long-sought regulatory clarity to help the U.S. lead in digital assets.
Crypto Council for Innovation CEO Ji Hun Kim called bipartisan support “critical,” while Solana Policy Institute CEO Miller Whitehouse-Levine urged Congress to “seize the moment.” Coinbase CEO Brian Armstrong said the lack of a federal framework had allowed bad actors like FTX to harm consumers and pushed much of the industry offshore.
However, several Senate Democrats have said this latest draft does not do enough to address their concerns.
The Republican-proposed text of the CLARITY Act as it currently stands falls short,“ Sen. Angela Alsobrooks said in a statement late on Wednesday. ”Key provisions including those addressing ethics for elected officials, consumer protection, illicit finance, conflicts of interest and market integrity must be strengthened.
Ethics threatens passage
A major obstacle remains the bill‘s ethics provisions. Democrats have demanded stronger language to address Trump’s crypto interests, including a memecoin he launched before Inauguration Day and his familys involvement in World Liberty Financial. Financial disclosures released last month revealed that Trump received millions of dollars tied to WLF.
The current draft bars public officials and their spouses from issuing or sponsoring digital assets but does not cover other family members. It also gives enforcement authority to the Justice Department and includes a sunset clause that would expire the restrictions in January 2029.
Alsobrooks previously called the current enforcement mechanism “unserious.”
Sen. Ruben Gallego, who supported the bill in committee, has also said he will not back it in the full Senate without stronger ethics language. He is joined by key Senate Democrats including Alsobrooks, Cory Booker, and Catherine Cortez Masto in opposing the current bill.
Sen. Elizabeth Warren, an outspoken crypto critic, said the bill “should be dead on arrival,” while Sen. Chris Murphy argued no Democrat should support it without a clear prohibition on the president continuing his crypto activities.
Amanda Fischer, policy director and chief operating officer for Better Markets, said the provision doesn't change much for Trump's crypto holdings. Fischer was also previously chief of staff for former Securities and Exchange Commission Chair Gary Gensler.
“The bottom line: Doesn't change much at all about Trump's existing crypto grift,” Fischer said in a post on X. “No divestment required. Maybe stops new crypto grifts, but it's up to his personal attorney [Acting U.S. Attorney General] Todd Blanche to enforce. Amnesty kicks in as soon as the new POTUS is inaugurated.”
Banks also push back
Banking groups also voiced opposition to the bill on Wednesday, arguing it needs stronger language to stop stablecoin rewards from drawing away from bank deposits.
The banking industry strongly supports establishing clear and rational rules of the road for digital assets, so consumers, the financial system and the economy are protected,“ the groups said. ”Unfortunately, the latest version of the Digital Asset Market Clarity Act released today in the Senate still puts at risk the local lending that drives economic activity in the U.S.
The American Bankers Association, the Bank Policy Institute, the Independent Community Bankers of America, and others who signed that statement have voiced their concerns over the past year about stablecoin rewards and that they would draw deposits away from traditional banks.