Key facts
- A new draft of the Digital Asset Market Clarity Act merges previous versions and adds an ethics provision.
- The ethics provision aims to prevent senior government officials, including President Donald Trump, from profiting from their own cryptocurrencies.
- Democrats are pushing for a stronger ethics clause, while Republicans and the White House favor a weaker version.
- The bill faces a tight deadline for passage before the Senate's August recess.
- Key negotiations are ongoing to reach a bipartisan agreement on the ethics provision.
A new draft of the Digital Asset Market Clarity Act has been released, merging previous versions and introducing an ethics provision. This provision aims to prevent senior government officials from sponsoring or issuing their own cryptocurrencies, a measure that has become a focal point in negotiations due to President Donald Trump's reported significant gains in the crypto market.
Democrats are pushing for a more stringent ethics clause that would directly impact Trump's existing holdings and future benefits, expressing distrust in the Department of Justice to enforce such measures while he is in office. The current proposal, agreed to by the White House, offers Trump a year to divest or place his businesses in a blind trust, with the provision set to expire at the end of the next presidential term. This has drawn objections from Democrats who argue it is insufficient and allows for continued benefit from existing tokens.
Senator Cynthia Lummis, a proponent of the bill, contends that the ethics provision applies broadly to various government officials and judges, with White House adviser Patrick Witt noting its unprecedented scope for a U.S. president. However, with the upcoming midterm elections, Democrats see Trump's crypto ties as a potent campaign issue.
Despite the ongoing debates, there is a general consensus among industry participants and many lawmakers that passing the bill before the Senate's August recess is desirable. The crypto industry advocates for the bill, citing its potential to establish investor protections and regulatory structure. However, some, like Senator Elizabeth Warren, have voiced strong opposition, citing concerns about investor protection and national security.
The timeline for passage is increasingly tight. A motion to proceed is expected early next week, potentially followed by a vote on the bill's substitute amendment later in the week or in the final week of the session, which concludes on August 7. For this to occur, a bipartisan agreement on the ethics provision is likely needed by July 30. The Senate's packed agenda, including nominations and other legislation, further complicates the path forward for the Clarity Act.