Key facts
- Key Senate Democrats have stated the latest draft of the CLARITY Act is insufficient on ethics, illicit finance, and consumer protections.
- Senator Cynthia Lummis acknowledged that the role of state attorneys general in bringing cases under ethics provisions was a Republican 'red line'.
- The CLARITY Act's probability of approval in 2026 has dropped to 39% on Polymarket.
- The bill proposes to ban covered elected officials from issuing or sponsoring crypto assets and requires them to sell existing holdings or place them in a blind trust.
- Senator Elizabeth Warren argued the current ethics provisions would allow President Donald Trump to continue his crypto businesses without significant oversight.
Senate Democrats have voiced significant opposition to the latest draft of the CLARITY Act, a proposed crypto market structure bill, citing deficiencies in ethics, consumer protection, and illicit finance provisions. This opposition has led to a substantial drop in the bill's perceived chances of passage, with Polymarket odds falling to 39% for approval this year.
Key Democratic senators, including Catherine Cortez Masto, Angela Alsobrooks, Cory Booker, Ruben Gallego, John Hickenlooper, Mark Warner, and Raphael Warnock, issued a joint statement expressing that the Republican-proposed text "falls short" and requires strengthening. Senator Alsobrooks specifically criticized the Republican ethics proposal as "wild and unserious," emphasizing the need to empower state attorneys general rather than relying solely on the Department of Justice for enforcement.
The revised draft includes provisions to limit senior government officials' cryptocurrency investments, banning them from issuing or sponsoring crypto assets and requiring them to sell existing holdings or place them in a blind trust by January 20, 2029. However, critics like Senator Elizabeth Warren argue these ethics clauses would allow President Donald Trump to continue his crypto businesses largely unimpeded, despite his reported $1.4 billion in crypto earnings last year. The bill also aims to enhance law enforcement powers regarding crypto-related crimes.
Senator Cynthia Lummis, a lead negotiator, acknowledged that the ethics provision, particularly the scope of state attorneys general's involvement, was a Republican 'red line.' The bill requires at least 60 votes to pass the Senate, necessitating bipartisan agreement.